ISLAMABAD — The International Monetary Fund (IMF) has twice rejected the Federal Board of Revenue’s (FBR) proposal to grant a 25 percent tax rebate to teachers and researchers starting July 1, 2025. FBR Chairman Rashid Mahmood Langrial informed the National Assembly Standing Committee on Finance about the IMF’s decision on Saturday.
Langrial explained that the IMF turned down the request due to the need for tax harmonisation across sectors. He added that the government might consider supporting teachers and researchers through budget allocations if possible, but no immediate relief is expected.
During the committee meeting, MNA Nafeesa Shah suggested the government could provide teachers with a special allowance instead of a tax rebate. However, State Minister of Finance Bilal Azhar Kayani stated that the 2025–26 budget has no fiscal space to accommodate such financial relief.
The committee also approved a revised procedure for arresting individuals involved in tax fraud. The new rules require approval from three FBR board members before any arrest and focus on preventing misuse of power. Arrests can be made if there is risk of escape, evidence tampering, tax fraud exceeding Rs50 million, or ignoring three tax notices.
Additionally, Langrial mentioned that the income tax exemption for pensioners has been removed from the Income Tax Ordinance. Now, only pensions above Rs10 million will be subject to tax. The committee also recommended increasing the withholding tax on cash withdrawals by non-filers from 0.6 percent to 0.8 percent, rejecting a proposal to raise it to 1 percent.
Finally, the FBR chairman stated that salaried individuals with taxable incomes between Rs600,000 and Rs1,200,000 will face a 1 percent tax. The committee’s decisions aim to strengthen tax compliance while balancing fiscal constraints.