ISLAMABAD: Federal Tax Ombudsman (FTO) has expressed serious concern that the current withholding procedure of tax deduction in vogue at District Account Offices (DAO) level, as they are not allowing tax credit to the salaried individuals.
The FTO has issued an order on Tuesday to address the concerns of the salaried individuals, particularly teachers.
Own Motion investigation was initiated by FTO Secretariat, Islamabad under FTO Ordinance, 2000 based on the Complaints Nos. 1225 to 1229/ LHR/IT/ 2024 in the cases of Complainants/ Teachers regarding excess tax deductions and subsequent ordeal faced by the taxpayers and hardships faced by salaried taxpayers.
It was observed during investigation of above complaints that all of the Complainants are subjected to excess tax deductions u/s 149 at the stage of deduction at source, despite the fact that they fully qualify the benefit under Clause (2) of Part Ill of Second Schedule to the Income Tax Ordinance, 2001.
The findings of the FTO office revealed that despite express provision of law regarding withholding tax u/s 149, allowing mandatory credit to tax withheld under other heads during the current period, the department has failed to appreciate concern raised by this Forum to address the issue and evolve mechanism to ensure strict adherence to substantive law.
The DAO Faisalabad is acting as withholding agent within an inflexible system; i.e., SAP without taking care of credit of tax withheld during the year under various heads. The department has failed to act to facilitate the salaried taxpayers.
It is observed that the current withholding procedure of tax deduction in vogue at DAOs level is not in conformity with the intent of the legislature as laid down under section 149 of the Income Tax Ordinance.
It is recommended that the FBR, AGPR and AG, Punjab may consider the requisite changes in the SAP module enabling it to allow adjustment of tax deducted under various provisions of the Ordinance and tax credits, enabling the salaried individuals/pensioners for timely credit and to circumvent long process of refund issuance in terms of Section 170 of the Ordinance.
The FBR to evolve a sound monitoring mechanism whereby it is ensured that the facility provided by the legislature is not misused at withholding stage; and report compliance within 90 days, FTO order added.
Copyright Business Recorder, 2024
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