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ISLAMABAD: The Federal Tax Ombudsman (FTO) has directed the Federal Board of Revenue (FBR) to check the pattern of issuance of less tax deduction certificates to salaried individuals by telecom companies. According to a new order issued by the FTO, the said complaint was filed under Section 10(1) of the Federal Tax Ombudsman Ordinance, 2000 (FTO Ordinance) against issuance of incorrect tax deduction certificate by a telecom company.

The complainant is a salaried person and filer and using telecom internet since last many years. He receives every year tax deduction certificate according to the Income Tax Ordinance, 2001 which is 15% of the whole amount he paid to the company. But this year, the company failed to provide him income tax certificate as per his payment deposited to the company.

The complainant has approached the FBR for redressal of his grievance, but all in vain. He needs the correct tax deduction certificate to file his tax return, hence this complaint.

Punishment to tax officials modified by FTO office

The company responded that the change is due to a structural adjustment we implemented. Specifically, we separated the Internet Monthly Line rent (MLR) into two distinct components: Internet and Infrastructure

(Infra). It is important to note that the infrastructure component is not subject to Withholding Tax (WHT).

As a result of this separation, the taxable amount has decreased, leading to a lower total on your Tax Certificate for fiscal year-2024.

The FTO order added though the queries raised by the complainant have been replied by the telecom company and reason of billing difference has

also been explained, yet the Telecom Company has failed to cite the law which allowed this sudden change and separation of Internet Monthly Line Rent into two components and suo motto exclusion of one component from the ambit of tax withholding.

Similar patterns may also be evolved by other telcos. The FBR’s naivety and ineptitude is equally visible as the taxpayer is highlighting incidence of lesser tax deduction but FBR’s field formation is indifferent to the said alert. Such a behavior tantamount to maladministration.

FTO has recommended the FBR Members lR- Operations and Policy, are directed to look into the explanation filed by the respondent Company and give their findings in the light of relevant law; and report compliance in 45 days.

Copyright Business Recorder, 2025

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