ISLAMABAD: Federal Tax Ombudsman (FTO) directed the Member Operations Federal Board of Revenue (FBR) to take immediate action to recover short deducted withholding tax from a state-owned organization (National Highways Authority).
The amount was not recovered due to negligence by some FBR’s field formations.
Earlier, Dr Asif Mahmood Jah in a landmark order has directed the FBR/Corporate Tax Office, Islamabad to conduct a comprehensive withholding audit of NHA to recover the short-paid tax.
FTO asks FBR to conduct ‘withholding audit’ of NHA
As per record a public interest request was moved by Waheed Shahzad Butt, an advocate against the discriminatory application of withholding taxes under Section 236A by 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. Maladministration was established against FBR/corporate tax office (CTO), Islamabad.
The FBR was directed to ensure that the CCIRs concerned conducts a comprehensive withholding audit of NHA and accordingly proceed under the law for the recovery of any short-paid amount established as a result of this audit activity.
Complainant stated that the government functionaries including the CTO, Islamabad and the NHA in violation of provisions of Sections 236A, 160, 161, 163,and 205 read with Rule 43 of the IT 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) 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 CTO, 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.
FTO letter stated, “I am directed to enclose herewith copy of email dated 20.06.2024 received from Waheed Shahzad Butt, Advocate inviting attention regarding deduction of withholding tax by the National Highway Authority at the rate of 5% while Punjab Highway Department is deducting withholding tax at the rate of 10%.
He has requested to ask NHA to pay deferential short paid amount of WHT of 5% on the sale proceed through auction under section 236A of the ITO, 2001.
Such amount is also recoverable alongwith additional surcharge at the rate of 18% in terms of section 205. You are requested to take action as per law under intimation to the complainant as well as to this Secretariat, FTO office added.
Copyright Business Recorder, 2024
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