FBR exempts pensioners from income tax
Reported by: `CT Report December 16, 2017
ISLAMABAD: Federal Board of Revenue (FBR) has said that income of all pensioners is exempt from tax and same in case of pensioners of armed forces.
The FBR clarified that tax is already being deducted in respect of all personnel of Armed Forces deriving taxable salaries and only electronic filing of returns is being facilitated.
“Moreover, pension of ex-servicemen of Armed Forces, like every other pensioner, is exempt from tax,” the FBR said.
The FBR further said that tax payers outreach program had been launched to approach and facilitate taxpayers, being individual employees, through their employers for filing of their returns. This program is a step towards broadening the tax base in the country. Pakistan Army took the lead in this respect and subsequently FBR has started a series of workshops to educate, motivate and facilitate the taxpayers to file their Income Tax Returns. Following this lead, various heads of large organizations and leading banks approached FBR in this respect.
In response different teams were constituted led by senior Members of FBR who conducted various meetings with heads of these organizations to create understanding and awareness about tax obligations and offered facilitation to the taxpayers to boost filing of Income Tax Returns.
What are the tax rates on pension?
By admin |
Pension means a periodical payment granted not in respect of any right, privilege, perquisite or office, but on account of past services after retirement, or on particular merits, and is taxed as salary. Pension received by a citizen of Pakistan is exempt from levy of tax under clause 8 of Part I of Second Schedule, subject to certain exceptions as he must not be working for the same employer in any capacity for any remuneration or reward. However, where the person receives more than such pensions, the exemption applies only to the higher of the pension received.
Category: Income Tax Tags: Income Tax Ordinance 2001, Pakistan Tax Lawyer
THE SECOND SCHEDULE
See Section 14(1)
(17) Any pension due to, or received by, an assessee being a citizen of Pakistan over sixty years of age :
Provided that, with effect from an assessment year commencing on or after the first day of July, 1992, this clause shall have effect as if the words “over sixty years of age” were omitted, so however that exemption under this clause shall apply in respect of pension from one employer only:
Provided further that exemption under this clause shall not apply in respect of a retired person who works for the same employer in any capacity for any remuneration or reward.
(17A) Any pension due to, or received by, an assessee in respect of any service rendered as a member of the Armed Forces of Pakistan or as an employee of the Federal Government or a Provincial Government.
Leave encashment on retirement. –
(17AA) Any sum representing encashment of leave preparatory to retirement of a member of the Armed Forces of Pakistan or an employee of the Federal Government or a Provincial Government.