In a significant move for government-employed teachers in Pakistan, the Federal Board of Revenue (FBR) has introduced a new directive that promises substantial tax relief. Dated March 6, 2025, this policy targets the taxation of income earned from paper checking or marking fees, ensuring it aligns with teachers’ regular salary tax rates under Section 149 of the Income Tax Ordinance.
This change addresses long-standing concerns about over-taxation and provides financial respite for full-time educators. Here’s everything you need to know about this development, its implications, and how it could affect your next paycheck.
What’s Changing for Teachers?
For years, full-time government teachers in Pakistan have voiced frustration over the tax deductions applied to their additional income from paper checking fees. Despite their regular salaries often falling below the taxable threshold or within lower tax brackets, the income from marking exam papers was taxed separately at higher rates under Section 153 of the Income Tax Ordinance, which governs income from services. This resulted in deductions as high as 11% for tax filers and 22% for non-filers—rates that felt unjust to many educators.
👉 Unsure about tax slabs? Explore the latest FBR Income Tax Slabs for 2024.
The FBR’s latest directive rectifies this anomaly. Effective immediately, paper checking fees will no longer be treated as a separate income stream. Instead, they will be combined with a teacher’s salary and taxed under the more favorable Section 149 slabs. This adjustment ensures that teachers aren’t unfairly penalized for their extra efforts and could lead to significant tax savings, especially for those with modest incomes.
Why This Matters: Addressing Over-Taxation
Imagine a teacher earning a monthly salary of PKR 50,000 (PKR 600,000 annually). Under Pakistan’s current tax laws, this income often falls below the taxable threshold, meaning no tax is deducted from their regular paycheck. However, if the same teacher earned an additional PKR 50,000 annually from paper checking, that amount was previously taxed separately at 11% (for filers) or 22% (for non-filers)—a deduction of PKR 5,500 or PKR 11,000, respectively. This was a bitter pill to swallow for educators already stretched thin.
Under the new rule, that PKR 50,000 will be added to their annual salary, bringing the total to PKR 650,000. If this combined amount remains below the taxable limit, no tax will be deducted at all. For teachers in higher income brackets, the savings could be even more pronounced, as their additional income won’t push them into steeper tax slabs when treated as part of their salary.
This policy shift reflects a broader intent to create a fairer tax system, ensuring that teachers—who play a vital role in shaping the nation’s future—are not disproportionately burdened.
Breaking Down the FBR Directive
The FBR’s directive, issued on March 6, 2025, instructs all its regional offices to implement this change promptly. Here’s a closer look at the key points:
- Uniform Tax Treatment: Paper checking fees are now classified as part of a teacher’s salary income, falling under Section 149 of the Income Tax Ordinance. This section offers tiered tax slabs that are generally more lenient than the flat rates applied to service-based income under Section 153.
- End of Excessive Deductions: Previously, marking fees were treated as a service, attracting higher tax rates. For example, a non-filer earning PKR 50,000 from paper checking faced a PKR 11,000 deduction—money that could have gone toward household expenses or savings.
- Implementation Deadline: The FBR has set March 31, 2025, as the deadline for its offices to act on this directive and report outcomes, signaling a swift rollout.
Teachers are encouraged to monitor their payslips and raise any discrepancies with their departments, referencing the FBR’s official document for support.
Real-World Examples of Tax Savings
To illustrate the impact, consider these scenarios:
- Low-Income Teacher:
- Annual Salary: PKR 600,000 (below taxable threshold)
- Paper Checking Fee: PKR 50,000
- Old Tax (Section 153): PKR 5,500 (11% as a filer)
- New Tax (Section 149): PKR 0 (combined income still below threshold)
- Savings: PKR 5,500
- Mid-Income Teacher:
- Annual Salary: PKR 1,200,000
- Paper Checking Fee: PKR 100,000
- Old Tax (Section 153): PKR 11,000 (11% as a filer)
- New Tax (Section 149): Combined income taxed at a lower slab rate, potentially saving 40–50% on the additional income’s tax burden
- Savings: Up to PKR 5,000–7,000 or more, depending on the slab
For teachers with higher salaries, the benefits scale accordingly, as the directive prevents their extra earnings from being taxed at punitive rates.
How Teachers Can Ensure Compliance
While the FBR has issued clear instructions, implementation may lag in some government departments—a common challenge in bureaucratic systems. Teachers should take these steps to secure their tax relief:
- Check Your Payslip: Review deductions on your next payment to confirm that paper checking fees are taxed as part of your salary.
- Raise Awareness: If you notice excessive deductions, inform your department about the FBR directive, ideally with a copy of the document in hand. It’s available on the FBR’s official website.
- Act by March 31, 2025: The deadline for FBR offices to report compliance is fast approaching, so prompt action can ensure you benefit from this policy sooner rather than later.
Proactivity is key. As one Urdu source noted, taxpayers often learn of such changes before departments do and end up guiding officials themselves.
A Step Toward Fairness
This FBR directive is a welcome relief for Pakistan’s teaching community, particularly those employed full-time by the government. By aligning the taxation of paper checking fees with salary income, it eliminates a longstanding inequity and puts more money back into teachers’ pockets. Whether you’re a low-earning educator escaping deductions entirely or a higher earner avoiding steep tax brackets, the financial impact could be meaningful.
For the latest updates, teachers should consult the FBR website or contact their local tax office. You can also explore the updated tax slabs on FBR Income Tax Slabs Updated or calculate your potential savings with the FBR Salary Income Tax Calculator 2025. As of March 19, 2025, this policy is poised to reshape how educators are taxed—proof that even small changes can make a big difference
