Islamabad, August 2, 2025 – The Federal Board of Revenue (FBR) has officially announced the discontinuation of the 25% tax rebate for full-time teachers and researchers starting July 1, 2025.
This change has been outlined in Income Tax Circular No. 1 of 2025-26, issued by the FBR to clarify recent amendments made under the Finance Act, 2025.
Previously, the rebate allowed full-time teachers and researchers to claim a 25% reduction against their payable income tax under clause (1), sub-clause (2) of Part III of the Second Schedule to the Income Tax Ordinance, 2001. However, this clause was omitted, and the rebate was no longer available from tax year 2023 onwards.
To temporarily revive the benefit, the Finance Act, 2025 introduced a new clause (3A) into the same schedule, granting the tax rebate to eligible teachers and researchers for three tax years — including 2023, 2024, and 2025. According to the FBR, this rebate window was reintroduced solely for these three years and will not be extended beyond tax year 2025.
The FBR emphasized that from tax year 2026 onwards, no tax rebate will be available to teachers and researchers. This means that teachers will no longer be eligible for the previous tax relief starting July 1, 2025. The FBR has advised all concerned taxpayers, especially teachers, to review their tax planning accordingly in light of the updated rebate policy.