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ISLAMABAD: The Federal Tax Ombudsman (FTO) has declared that the M/s K-Electric Karachi is wrongly collecting advance income tax from mosques.

According to an order issued by FTO Dr Asif Mahmood Jan against the K-Electric in case number 2862/KHI/ST/2022, the complaint was filed against the said company in terms of section 10(1) of the Federal Tax Ombudsman Ordinance 2000 for charging and collecting sales tax and advance income tax on Masajid through the electric bills since last two months.

The FTO’s order revealed that since M/s K-Electric falls within the jurisdiction of LTO Karachi, therefore, the complaint was forwarded to Chief Commissioner IR LTO, for comments.

The LTO responded that the M/s K-Electric Karachi is charging sales tax on consumption of electricity by the mosque; as consumption of electricity by any entity is not exempt from payment of sales tax, therefore, its charging and collection through bill for the mosque is legal. In so far the income tax is concerned, section 235 of the Income Tax Ordinance 2001 provides for a mechanism of advance income tax collection on the amount of electricity bills of industrial or commercial or domestic consumers. Since the mosque is not covered under any three kinds of consumers, hence, charging of income tax by the M/s K-Electric Karachi, through bill from the mosques is not in accordance with the income tax law.

It was requested to advise the complainant to get it rectified from local office of M/s K-Electric Karachi and explain to them the situation the mosques are exempt from collection of income tax under section 235 of the Income Tax Ordinance 2001.

The complainant agreed that the sales tax is chargeable but they had objection on income tax.

The LTO also issued a letter that the K-Electric should not collect income tax from the mosque.

Since the issue was resolved; therefore, the case has been closed by the FTO office, the FTO’s order said.

Copyright Business Recorder, 2022

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