Deductions, tax credits to salaried class, pensioners: FTO directs FBR, AGPR and AG Sindh to allow adjustment

ISLAMABAD: The Federal Tax Ombudsman (FTO) has directed the Federal Board of Revenue (FBR), Accountant General of Pakistan Revenue (AGPR), and Accountant General Sindh to allow adjustment of tax deducted under various provisions of the Income Tax Ordinance and tax credits to the salaried individuals/ pensioners.

This is an own motion investigation initiated while exercising powers conferred u/s 9(1) of the Federal Tax Ombudsman Ordinance, 2000 (FTO Ordinance) to investigate the lack of symmetry committed by the FBR’s formations in excess tax deductions and subsequent ordeal faced by the salaried taxpayers by not implementing legal facility of adjustment of adjustable taxes withheld from them and tax credits admissible to them, the FTO added.

According to the FTO’s recommendations to the FBR, the FBR, AGPR and AG, Sindh should consider the requisite changes in the SAP module enabling it to allow adjustment of tax deducted under various provisions of the Ordinance and tax credits, enabling the salaried individuals/pensioners for timely credit and to circumvent long process of refund issuance in terms of Section 170 of the Ordinance.

The FBR should also evolve a sound monitoring mechanism whereby it is ensured that the facility provided by the legislature is not misused at withholding stage.

DAOs inform FTO: No guidelines for adjustment of taxes withheld from salaries

The FTO explained that the basic intent and rational behind invoking Own Motion powers in this case was to oversee implementation of explicit provisions of the statute and the proactive approach of the dept in facilitating wide strata of salaried taxpayers who are in receipt of fixed income and yet have to undergo extensive cobweb of inattention and as a consequence are deprived of their legal rights.

The response submitted by the District Account Officers unequivocally suggests that they had no knowledge of the legal facility of adjustment of adjustable taxes withheld and tax credits admissible to salaried taxpayers. A certain mechanical procedure is in place called SAP and the Withholding Agents are at liberty for incorporating in their system whatever they desire and miss out other legal tax credits available to the salaried taxpayers thereby enhancing their agony and shrinking their already compressed fixed monthly income. However, after issuance of this notice, the Commissioner Withholding Taxes Zone.

The RTO Sukkur vide letter dated 30.05.2024 issued necessary instruction to the District Accounts Offices at Sukkur, Ghotki, Khairpur Larkana, Kamber Shahdadkot, Shikarpur and Jacobabad for adjustment towards tax withheld from employees under “Other head” and tax credit admissible under section6l & 63 of ITO, 2001 after obtaining documentary evidence.

Copyright Business Recorder, 2024