Tax recovery: FTO directs FBR to conduct WHT audit of NHA for TY23

ISLAMABAD: Federal Tax Ombudsman (FTO) Dr Asif Mahmood Jah in a landmark order has directed the Federal Board of Revenue (FBR) to conduct a comprehensive withholding audit of a state-owned organisation (National Highways Authority) for the tax year 2023 and recover the short paid tax.

The order of the FTO has also directed the FBR to carry out detailed scrutiny of accounts for recovery of the short-paid amount of tax.

Sources told this correspondent that a public interest request was moved by Waheed Shahzad Butt, an advocate against the discriminatory application of withholding taxes under Section 236A of the Income Tax Ordinance, 2001 by the federal government organisation (NHA), wherein, after investigation it was found by the FTO that charge of WHT on the auction of toll collection rights needs a comprehensive withholding audit

Butt further said that earlier maladministration was established against FBR/CTO/NHA.

The FBR was directed to ensure that the CCIRs concerned conducts a comprehensive withholding audit of NHA for the years 2021 and 2022 and accordingly proceed under the law for the recovery of any short-paid amount established as a result of this audit activity.

The FTO order stated that the complainant approached this office to seek justice against the discriminatory application of withholding taxes.

The complainant stated that the government functionaries including the Corporate Tax Office (CTO), Islamabad and the Authority in violation of provisions of Sections 236A, 160, 161, 163,and 205 of the Income Tax Ordinance, 2001 read with Rule 43 of the Income Tax Rules, 2002 are not properly deducting withholding taxes at prescribed rates and thus, deprive revenue to the public exchequer.

The complainant further alleged that Rs27,100,455,965 one year payment under one single head (Section 236A of the Ordinance) pertaining to the tax period July 2022 to June 2023 remained unchecked by CTO Islamabad which proved meaningful incompetency/inefficiency of the WHT monitoring wing of CTO Islamabad.

The complainant prayed that the FBR chairman may be directed to initiate strict lawful proceedings against public servants representing tax offices at Islamabad and NHA for their proven blunt violation of provisions of law to deprive the public exchequer without any lawful authority and necessary/lawful SOP/Instructions may be issued to the FBR field formations to keep their eyes open where there are chances of misuse of authority by WHT agents specifically in the government/public sector organisations. Rs27,100,455,965 one-year payment under one single head remained unchecked by the officers of the CTO Islamabad.

The FBR is directed to ensure that the CCIR concerned conducts a comprehensive withholding audit of NHA for the tax year 2023 and recovers short tax after detailed scrutiny of accounts, the FTO ordered.

Copyright Business Recorder, 2023