Govt depts, hospitals, LG and defence institutions: Updated list of FTN recipients issued by FBR

ISLAMABAD: The Federal Board of Revenue (FBR) has issued an updated list of 9,190 government departments, hospitals/educational/health institutions local government departments, Tehsil municipal authorities, and defence institutions that have obtained Free Tax Numbers (FTNs) for availing tax exemptions.

The FBR’s updated list of FTNs contains taxpayer’s name, jurisdiction of the relevant tax office, and the registration date of the taxpayer for obtaining the FTNs.

A tax expert told Business Recorder that the FBR needs to review the list because exemption has also been granted to some institutions who are liable to pay taxes but obtained FTNs.

The holder of FTN is not exempted from deduction of due taxes being withholding agent, if any.

Govt entities: FBR to take policy decision on FTNs

The income of the FTN holder may be exempted from tax but the holder has to deduct tax where required. The genuine FTN holder may not be required to pay tax, has to fulfil other obligations under the law. Therefore, a review of the FTN list is necessary at the board’s level, tax expert added.

Last year, Appellate Tribunal Inland Revenue (ATIR), Islamabad, in the matter of M/s Wah Industries Limited, Wah Cantt (appellant), directed the the Federal Board of Revenue to take a policy decision on the issuance of FTNs to the government authorities/departments seeking tax exemptions on the basis of allocated FTNs.

According to judgment of the ATIR, the FBR will take a policy decision on the issuance of the FTNs to the government authorities including local government departments and Tehsil municipal authorities seeking tax exemptions on the basis of FTNs.

Therefore, under the circumstance, the appellant was not required to deduct tax under Section 150 of the Income Tax Ordinance, while making payments to its board. Accordingly, the orders passed by the lower tax authorities are vacated.

The ATIR had declared that the POF Board is the department of the federal government and any payment received by the federal government, a provincial government, or a local government shall not be liable to any collection or deduction of advance tax. Further, the revenue department itself issued the FTNs to the POF Board.

Copyright Business Recorder, 2023