Federal Cabinet Restores 25% Income Tax Rebate for Teachers

ISLAMABAD: The Federal Cabinet has officially reinstated the 25% income tax rebate for teachers, a significant relief for educators nationwide. This decision follows extensive efforts by the Federal Tax Ombudsman (FTO), who intervened after receiving over 5,000 complaints from teachers struggling with tax deductions.

During a press briefing, Khalid Javed, Registrar to the FTO, and Almas Ali Jovindah, Advisor for the Legal and Media Wing, explained that the income tax rebate for teachers was originally introduced under the Income Tax Ordinance 2001. However, educators faced recurring issues in claiming the rebate, particularly with delays in tax refunds.

The complaints highlighted that Salary Disbursing Authorities and Withholding Authorities had been over-deducting taxes without factoring in the 25% rebate for teachers, leading to a backlog of unresolved refund claims.

In November 2024, the Federal Board of Revenue (FBR) announced that the income tax rebate for teachers had been removed under the Finance Act of 2022, making it inapplicable for the tax years 2023 and 2024. This sparked widespread discontent, prompting a wave of complaints to the FTO Secretariat.

Recognizing the legal and historical significance of the tax rebate for teachers, the FTO engaged in ongoing discussions with the FBR, urging them to reconsider. These efforts led to the Federal Cabinet’s decision to reinstate the 25% income tax rebate for educators, ensuring they receive the financial relief they were previously entitled to.