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ISLAMABAD: The Federal Tax Ombudsman (FTO) Office on Wednesday said that the Federal Board of Revenue’s creation of excessive tax demands or exaggerated tax demands against the business community comes under the purview of maladministration.

Responding to a query of Business Recorder, Majid Qureshi, senior advisor for media and income tax, informed journalists on Wednesday that the FTO Office has received cases of excessive tax demands by the FBR’s field offices. “Yes such cases are covered under the definition of mal-administration,” he added.

Addressing a press conference, the FTO advisor said that the FTO office has barred the FBR from excessive tax deductions from the pay/wages of the low-paid employees.

The FTO had issued findings/recommendations in the said complaint vide order dated 24 February 2022.

The departmental representative pleaded that, “The question as to whether a person is an employee under a master-servant relationship, or a service provider is a question of fact that needs to be established in each situation. Hence, any such clarification of general nature is likely to be misused and may cause a loss of revenue.”

The FTO explained to the departmental representative that in order to determine “Employer-Employee Relationship” for the purpose of taxation under the Income Tax Ordinance, 2001, the basic parameter was the existence of a “Master-Servant Relationship” between the persons. It was further advised that regular/ad hoc/temporary/daily wages are all different shades and forms of employment and the law does not create any distinction among all these forms.

Qureshi stated that the FBR considered the FTO’s point of view and resultantly, a clarification in this respect has been issued vide CNo 3(3)/2022-S(CM)/81818-R dated 11.04.2022). The findings/recommendations issued by the FTO have now been fully implemented by the FBR.

It may also be mentioned that Accountant General of Pakistan Revenue has already implemented the above findings, as a result of which all low-paid contract employees at the FTO HQs office have received salary for the month of March without deduction of income tax. In view of the foregoing, the FTO has desired that all advisors at regional offices should do the following: (i) Widely publicize the subject findings/recommendations as public relief order.

(ii) Ensure implementation through respective Districts Accounts Offices.

(iii) The Regional Offices of the Account General of Pakistan Revenues may also be approached by the respective regional advisors at Peshawar, Lahore, Karachi and Quetta for immediate implementation of the recommendations on the above lines, Qureshi added.

Copyright Business Recorder, 2022

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