Which Tax Concessions are Withdrawn for Tax Year 2025

Pakistan’s Finance Bill 2024 proposes several changes impacting taxpayers, including the withdrawal of specific tax concessions and restrictions on foreign travel for non-filers. Let’s break down the key points:

Goodbye to 25% Tax Reduction for Teachers:

  • Government Subsidies: Subsidy income received from the federal government for implementing government orders will no longer be exempt from tax.
  • Educator/Researcher Tax Credit: The 25% tax credit previously available to qualified full-time teachers and researchers in approved educational or research institutions is proposed for removal.

Travel Restrictions for Non-Tax Filers:

The existing power to disable mobile phones and disconnect utilities for non-filing citizens will be expanded. The new proposal empowers the Federal Board of Revenue (FBR) to restrict foreign travel for Pakistani non-filers. However, exceptions will apply to:

  • Non-resident Pakistanis with NICOP (National Identity Card for Overseas Pakistanis)
  • Minors
  • Students
  • Other exempted categories as notified by the FBR

Increased Tax on Profit on Debt:

The tax rate and withholding tax on dividends from mutual funds deriving at least 50% of their income from profit on debt will be increased from 15% to 25% (35% for Non Filers).

What This Means for Taxpayers:

These proposed changes aim to broaden the tax base and potentially increase government revenue. However, they may also impact individuals who previously benefited from tax concessions. Non-filing citizens could face significant inconvenience with restricted international travel on top of existing penalties. Investors in specific mutual funds might also be subject to higher tax burdens.

Staying Informed:

Taxpayers are advised to stay updated on the finalization of the Finance Bill 2024. Consulting with a tax advisor can help individuals understand the full implications of these changes and ensure compliance with tax regulations.

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