Islamabad, September 9, 2025 – The Federal Board of Revenue (FBR) has disclosed that pension income accounted for the single largest share of tax exemptions granted during the year, according to its latest report on tax expenditures for 2025.
The figures show that total exemptions and concessions reached Rs545 billion under the Income Tax Ordinance, 2001. Out of this, pension income received a relief of Rs157 billion, making up nearly 29 percent of the overall exemptions. This underscores how pension benefits continue to dominate the landscape of tax reliefs extended by the government.
The report further revealed that the social security sector was the second-highest beneficiary, availing Rs152 billion in exemptions. The energy and mining sector followed with Rs103.5 billion, while the financial sector secured Rs82 billion. Education was granted Rs17 billion worth of income tax relief.
In addition, Rs9 billion was foregone in exemptions for donations and charities, reflecting the government’s effort to encourage social welfare contributions. The tribal sector availed Rs8 billion in relief, the information technology sector Rs6 billion, and salaried individuals received Rs5 billion in exemptions on their income. The health and pharmaceutical sector was granted Rs3.5 billion in tax concessions.
According to the report, total income tax exemptions and concessions for Tax Year 2024 represented 22.39 percent of the overall tax expenditure. As a share of GDP, tax expenditures declined from 0.57 percent in FY 2022 to 0.52 percent in FY 2024, signaling a gradual reduction in the scope of such reliefs.
The prominence of pension income highlights the state’s continuing commitment to protect retirees, ensuring they receive financial ease despite fiscal pressures.