ITO 2001 and IT Rules of 2002: Overlapping provisions exist

RECORDER REPORT

ISLAMABAD: The Income Tax Ordinance of 2001 and Income Tax Rules 2002 have overlapping provisions on filing of Annual Statements under Section 165 of the Income Tax Ordinance 2001 for deduction/withholding of income tax on contracts, sales, supplies, services divided and rent etc.

Legal experts told Business Recorder on Friday that taxpayers were confused about the filing of the Annual Statement under Section 165 of the Income Tax Ordinance for withholding of taxes other than category of ‘salary’.

Details showed that the Rule 44(1) of the Income Tax Rules 2002 (Rules) required that the Annual Statement as required under Section 165(1) of the Income Tax Ordinance, 2001 (Ordinance) for a financial year was to be furnished in accordance with the format set out in Part VIII & Part IX of the Second Schedule to the Rules.

According to provisions of Section 165(1) of the Ordinance, there is no requirement for filing Annual Statement; only a monthly statement is to be filed for all withholding taxes other than tax withheld on salaries.

On the other hand, according to Rules and regulations posted on FBR’s web portal, prescribed Annual Statements were available and non-filing of the same was considered to be default by field formations.

The FBR should issue necessary instructions whether the Annual Statement under Section 165 of the Income Tax Ordinance for withholding of taxes other than from salary was required to be filed or not, sources added.