Understanding Tax Adjustments and Rebates in Pakistan

Filing taxes is an essential aspect of being a responsible citizen. It not only helps document the growth of the economy but also allows individuals to claim tax adjustments and refunds in case they have overpaid their taxes. In Pakistan, the tax system is complex, and understanding tax adjustments and rebates can be challenging for the average citizen. In this article, we will explain the different types of tax adjustments and rebates available in Pakistan and how you can claim them.

Utility Bills

One of the most common ways to claim a tax refund is by documenting utility bills such as telephone bills (both prepaid and postpaid), electricity bills, and internet bills. By maintaining monthly bills or asking for Tax Deduction Certificates from relevant service providers, one can get an annual tax certificate.

Zakat and Donations

In Pakistan, the amount paid as zakat and donations (subject to pre-requisite conditions) is a deductible allowance. The total taxable income is calculated after deducting any amount paid as donation/zakat. The two major criteria for this deduction are that the amount must be paid through a banking channel, and the organizations must be recognized by the Federal Board of Revenue for the allowance.

Transfer of Ownership of Property/Motor Vehicle

The Federal Board of Revenue deducts advance taxes on buying and selling of property, as well as on transfer of ownership of a motor vehicle. If you paid any of these taxes during the financial year, you can claim a tax rebate on these in that specific financial year.

Senior Citizen or Full-time Teacher

In Pakistan, tax credit is allowed to persons over the age of sixty years. Additionally, 25% tax rebate is allowed to teachers if that is their full-time job.

Investments in Shares, Insurance Premiums, Tax Deducted on Cash Withdrawal from Banking Transactions, and Educational Payments

Previously, the Federal Board of Revenue allowed tax credits on investments in shares, insurance premiums, tax deducted on cash withdrawal from banking transactions, and on educational payments. However, over time, these deductions have been removed. But if you are filing tax returns for previous periods, you can keep these deductions in mind.

In conclusion, tax adjustments and rebates are important for taxpayers in Pakistan. It is crucial to document all relevant information and file taxes on time to ensure that you do not miss out on any potential tax refunds. By following the guidelines set forth by the Federal Board of Revenue and understanding the tax system, taxpayers can save money and contribute to the growth of the economy.

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