Non-compliant withholding agents: FTO orders FBR to initiate proceedings

ISLAMABAD: Federal Tax Ombudsman (FTO) Mushtaq Ahmad Sukhera has directed the Federal Board of Revenue (FBR) to initiate proceedings against non-compliant withholding agents engaged in collection/deduction of advance tax at the time of sale, purchase or transfer/registration of immovable properties.

According to the directive of the FTO office to the FBR, Federal Tax Ombudsman has further directed FBR to initiate and finalise proceedings against non-compliant withholding agents under Section 161 read with Section 205, where default is established in terms of Section 165 of the Income Tax Ordinance.

He has further directed FBR to register all the non-compliant withholding agents on the tax roll and to ensure submission of withholding statements in terms of section 165

of the Income Tax Ordinance.

An own motion investigation was initiated to investigate the failure of FBR to monitor the advance tax to be collected at the time of sale, purchase or transfer/registration of immovable properties in terms of section 236C and 236K of the Income Tax Ordinance , 2001. The total number of withholding agents is 11,723 whereby shockingly 6,406 withholding agents are not on Tax roll as reflected by the data provided by the FBR.

It was further found during the investigation that most of the withholding agents, who are on NTN, were non-filers of withholding tax statements that they are required to submit under section 165 of the Ordinance.

The public exchequer has/had thus been losing huge legitimate tax, which the FBR ought to have collected, wherever applicable.

Federal Tax Ombudsman Own Motion decision states this to be sheer ineptness and inefficiency on the part of FBR along with its field formations that ended into failure in developing a timely, proper and robust mechanism to monitor Advance Tax collections under Section 236C and 236K of the Ordinance which tantamount to maladministration. Therefore, FBR has been directed to do the needful and report compliance within 60 days, FTO added.

Copyright Business Recorder, 2021