Karachi, February 5, 2025 – Pensioners in Pakistan have benefitted from a tax exemption amounting to Rs 43.61 billion on their income within a year, according to official documents.
The latest annual report for 2024, released by the Federal Board of Revenue (FBR), highlights substantial tax relief granted to pensioners under the Second Schedule of the Income Tax Ordinance, 2001.
The FBR reported that pensioners were provided an income tax exemption of Rs 2.39 billion under Clause 8 of the Second Schedule. This clause specifies that any pension received by a Pakistani citizen from a former employer is exempt from tax, provided that the individual is not still employed by the same employer or an associate. If a pensioner receives multiple pensions, the exemption is applied to the higher amount.
Additionally, the FBR stated that pensioners received tax exemptions amounting to Rs 23.32 billion under Clause 9 of the Second Schedule. This clause grants exemption to pensions received for services rendered in the Armed Forces of Pakistan, Federal Government, or Provincial Government. Furthermore, it covers pensions provided to the families and dependents of public servants and military personnel who have passed away during service.
The report further disclosed that pensioners availed income tax exemptions worth Rs 17.90 billion under Clause 12 of the Second Schedule. This clause covers payments related to the commutation of pension received from the government or under any pension scheme approved by the FBR.
Pensioners in Pakistan continue to benefit significantly from these exemptions, which ease their financial burden and support their post-retirement stability. The FBR emphasized that these provisions play a crucial role in ensuring economic relief for retired individuals, particularly those relying solely on pension income.
As pensioners constitute a vulnerable segment of society, the tax exemptions serve as a financial safeguard, ensuring they receive maximum benefits without the strain of excessive taxation. The FBR remains committed to facilitating pensioners by maintaining and updating policies that offer tax relief to retired individuals across various sectors.
The report underscores the importance of these tax exemptions in supporting pensioners and acknowledges the government’s role in prioritizing their financial well-being. Moving forward, the FBR aims to enhance transparency and efficiency in granting such exemptions to ensure that pensioners receive their entitled benefits seamlessly.