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LAHORE: A pensioner has approached the Federal Tax Ombudsman (FTO) against the Federal Board of Revenue’s online system “IRIS” for not allowing computing tax liability in accordance with law.

In a written complaint filed by one retired government employee Abdul Basit Khan, it has been pointed out that the Board has designed online income tax return format and restricted certain fields, and thus forcing the complainant to prepare income tax return in accordance with the Board’s understanding/interpretation of law.

He said that the denial of the department to file income tax return electronically by imposing its own interpretation of law usurping the right of the complainant to e-file tax return in accordance with law comes within the definition of maladministration as defined under section 2(3) of the Federal Tax Ombudsman Ordinance, 2000, therefore, the Federal Tax Ombudsman should take notice and direct the Board to remove the restriction of automatic calculation of tax credit on Behbood Saving Certificate and Pension Benefit Account up his complaint against the FBR.

Khan said the clause (6) of Part-III of Second Schedule to the Income Tax Ordinance (ITO) 2001, the tax payable in respect of any amount paid as yield or profit on investment in Behbood Saving Certificate (BSC) of pensioners Benefit Account (PBA) should not exceed 10 percent of such profit but the online return format under IRIS calculates tax liability in violation of this clause.

It may be noted that the income tax return for the tax year 2021 is ready in time to be filed electronically. However, the Board’s online system “IRIS” is not allowing to compute tax liability in accordance with law, as the Board has designed online income tax return format and restricted certain fields requiring to prepare income tax return in accordance with the Board’s understanding/interpretation of law.

The complainant has pleaded that the FBR has denied the right of appeal of taxpayer to contest unlawful interpretation by imposing unlawful interpretation of the clause (6) of Part-III of Second Schedule to the ITO 2001.

He has urged the FTO to direct the Board to remove the restriction of automatic calculation of tax credit on Behbood Saving Certificate and Pension Benefit Account and allow the complainant to file its return electronically according to its own interpretation of law.

When contacted Dr Ikram Ul Haq, a renowned tax expert, he termed it as an irony, saying that charging tax on pensions when taxpayers club it with their yield on Behbood Saving Certificate was unjustified. He said the scheme was exclusively meant for pensioners and the idea was to tax at 10 percent under a separate block. According to him, the pension was also exempted from withholding tax because it could not be treated as the income of pensioners, he added.

Copyright Business Recorder, 2022

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