More efforts and expenses than gains: salaried persons shy of claiming tax refunds

A large number of salaried individuals are reluctant to obtain income tax refund deducted at source on monthly basis as more efforts and money are required to get refund as compared to actual refund amount. Sources told Business Recorder here on Saturday that the salaried individuals cannot claim refund of the sales tax paid in restaurants and hotels despite having the documented receipts.
The sales tax is an indirect tax or consumption tax whose refund cannot be obtained by the customers visiting restaurants and food outlets. Such receipts could be used in any kind of scheme of Consumers Lucky Draw or Lottery Scheme to encourage documentation. Secondly, it is also a misconception that the salaried taxpayers can claim withholding tax refund of the amount deducted on the pre-paid calling cards because the receipts of the deducted tax or proof of tax payment is not available in such cases.
However, refund of withholding tax could be claimed in the post-paid cellular packages where receipt of payment of tax has been issued to the consumers. The certificate of the tax payment has to be deposited along with the income tax returns for refund purposes.
The salaried persons can also claim refund of the withholding tax deducted on cash withdrawal from banks by obtaining tax deduction certificate from the banks. The refund of the deduction of tax on utility bills could also be obtained by the banks, sources stated.
In most of the cases of salaried persons, there is a general perception that the tax department would not pay the refund. Thus, there is no need to hire lawyer for filing of refund claims, or utilise money and resources for claiming income tax refund of the deducted amount on salary income. The cost of hiring a lawyer would be much more as compared to the actual amount involved in refund payment. Thus, salaried persons are usually reluctant to claim refunds due to lack of knowledge as well as cost of legal expert.
Sources said that the FBR has not started any kind of awareness campaign for the general public, particularly salaried class, for claiming refunds of the deducted amount of tax. A number of salaried persons are also unaware of the electronic procedure for filing of income tax return electronically. When a salaried person receives a notice to file return on the basis of data of purchasing of new vehicle, he usually rushes to some income tax lawyer for filing of income tax return. It is a fact that even salaried persons have no idea about electronic filing of returns through FBR Web-Portal and they cannot independently feed data of income tax returns. If a salaried person is unable to electronically file return, how can he claim refund of any deducted amount on the presumed complicated tax calculation procedures?
In the absence of a simple e-filing procedure for salaried persons, even NTN holders are reluctant to access the FBR Web-Portal for filing of their returns. If some kind of a simple procedure has been specified for the salaried persons, they can file returns as well as claim refund of the tax payment during the entire fiscal.
A number of salaried persons told this scribe that they are unaware of the procedure for obtaining income tax refunds. Secondly, they admitted that the FBR Taxpayer Education and Facilitation Wing Never guided the salaried individuals for claiming refunds. Despite issuance of tax facilitation guides, practically taxpayers do not know anything about the procedure for obtaining refund of the deducted amount from salary.
An expert said that the companies have separate Human Resource Departments, which can also play their due role in guiding their employees for obtaining income tax refund deducted from salary on annual basis.
Sources said that even the salaried persons have no knowledge that the FBR had issued a circular--No 18 of 2004--which allowed adjustment of tax liability of salaried employers being withholding agents. Under this circular, every employer, while deducting income tax payable on the income chargeable under the head "Salary" of its employees, is allowed under the provisions of Section 149 of the Income Tax Ordinance, 2001 to make such adjustments, as may be necessary, for any excess deduction or deficiency arising out of any previous deduction or failure to make deduction during the tax year.
A salaried person at times is also liable to withholding tax as owner of a motor vehicle or/and a subscriber of telephone (including mobile phone) under section 234/236 of the Income Tax Ordinance, 2001 respectively, in addition to the tax deduction on salary income u/s 149 of the Income Tax Ordinance, 2001.
The tax so collected/deducted in certain situations exceeds the actual tax payable by such a salaried person, entitling him to a refund. For facilitating salaried taxpayers having income exclusively from salary, the employer in order to work out the tax liability of the employee under section 149 of the Ordinance, is also allowed to make adjustment of the income tax payments by such salaried persons under section 234 and 236 of the Income Tax Ordinance, 2001 during a tax year.
Such salaried taxpayer, is entitled to credit of such tax payment only if he is the owner of the motor vehicle or subscriber of telephone in his own name, as the case may be. The employer shall obtain the evidence of payment of the aforesaid tax by the employee, before allowing adjustment for such payments claimed by the employee. The evidence shall be retained by the employer for production before the tax authorities when required by them, the FBR circular said.