FBR checks working of withholding agents having FTNs

ISLAMABAD: The Federal Board of Revenue has launched a country-wide exercise to check whether around 1000 holders of Free Tax Numbers (FTNs) are properly deducting and withholding tax on supplies and services rendered by them being withholding agents.

Sources told Business Recorder here that the holders of the FTNs are exempted from tax, but they have to withhold tax and deposit the same timely in the national exchequer. Even the holder of the FTN has to operate as withholding agent. In case the exempted entities and departments like government organisations/ministries with FTNs have been engaged in obtaining supplies and services, they are liable to deduct the due amount of tax and deposit the same in the national exchequer. There are many exempt departments, which have been engaged in earning income from rental property. These organisations being withholding agents have to deduct and deposit the tax on rental income as admissible under the relevant provisions of the Income Tax Ordinance 2001. There are many houses in federal government and other posh areas where houses have been rented to foreigners and rent has been obtained in foreign currencies. Such exempt organisations or persons have to deduct the tax on rental income and deposit the same in the national kitty.

At the same time, exempt entity does not mean that he is not a withholding agent. The data of government departments having FTNs would be analysed whether they are properly working as withholding agents. The FBR will also check the number of FTN holders where tax has been deducted by Accountant General of Pakistan. It is the reasonability of the FBR to verify that the holders of FTNs being withholding agents must deduct and deposit the deducted amount in the national kitty in the prescribed time period under the law.

According to the FBR data, approximately 1000 government organisations, departments, semi-government organisations, ministries, autonomous bodies and NGOs etc have obtained the FTNs to avail tax exemptions.