FBR Targets Online Academies, Teachers, & Online Marketplaces in New Tax Net

The Federal Board of Revenue (FBR) has proposed imposing taxes on the income of online academies, digital educators, and e-commerce businesses operating via online marketplaces. The proposal also includes collecting income tax from recreational clubs, including the Islamabad Club. The Senate Standing Committee on Finance and Revenue, chaired by Saleem Mandviwalla, held its sixth consecutive session on Wednesday, where the “Income Tax” provisions of the Finance Bill 2025-26 were discussed.

During the briefing, FBR officials stated that the government has decided to tax the income of online academies and teachers. Across the country, many teachers are providing digital education services, with some tutor academies earning between Rs 20 million and Rs 30 million. A new Clause 17C has been introduced in the Finance Bill 2025-26 to address this. Under the same clause, e-commerce businesses using online marketplaces will also face new tax obligations, as the government aims to broaden the tax base within the rapidly growing digital sector.

The Committee was also briefed on tax relief measures for the salaried class. The Chairman FBR noted that tax rates have been significantly reduced for salaried individuals. Specifically, the tax for those earning an annual income between Rs 600,000 and Rs 1.2 million has been reduced from 5 percent to 2.5 percent. Individuals earning Rs 1.2 million annually will now pay Rs 12,500 per year in tax. Additionally, the surcharge on income above Rs 10 million has been lowered from 10 percent to 9 percent.

The Committee recommended that individuals earning a monthly income of Rs 100,000 be exempted from income tax.

It was further revealed that the Finance Bill 2025-26 proposes to tax recreational clubs, including the Islamabad Club, which were previously exempt. State Minister for Finance and Revenue Bilal Azhar Kayani stated that these clubs must pay tax when their income exceeds expenditure, in line with efforts to expand the national tax base.

However, the Senate Committee opposed taxing the Islamabad Club’s income and recommended tax exemption for individuals earning up to Rs 1.2 million annually. It also rejected the proposal to tax small-scale online businesses, suggesting instead that FBR should tax goods rather than services in the e-commerce sector.

The Federal Finance Minister also announced a new mortgage facility for houses up to 2,000 square feet. Under this initiative, individuals will be eligible for a tax credit not exceeding 30 percent of their total income.

In another proposal, the FBR has moved to disallow 10 percent of expenses on purchases from non-registered suppliers. The Committee criticized this move, arguing it would discourage market competition due to the limited number of registered suppliers across the country.

Additionally, concerns were raised over a newly inserted clause restricting “Eligible Persons” from making purchases exceeding 130 percent of their previously declared wealth. The Committee recommended increasing this threshold to 400 percent.

Senators Syed Shibli Faraz, Mohsin Aziz, Fesal Vawda, Anusha Rahman Ahmad Khan, Muhammad Abdul Qadir, Ahmed Khan, Shahzaib Durrani, Finance Minister Muhammad Aurangzeb, State Minister Bilal Azhar Kayani, FBR Chairman Rashid Mahmood Langrial, and other senior officials attended the session.

Also read:

Local E-commerce to Get Boost After Approval of 5% Tax on Foreign Sellers & Google Ads