Salaried individuals: AGPR to upgrade SAP module to avoid lengthy refund processes
ISLAMABAD: On the recommendations of the Federal Tax Ombudsman (FTO), the Accountant General Pakistan Revenues (AGPR) has agreed to update “SAP module” to facilitate tax adjustments and credits for salaried individuals and pensioners, avoiding lengthy refund processes.
Under the agreed arrangement between the AGPR and the Federal Board of Revenue (FBR), tax will be adjusted up to the tax liability of the AGPR.
Sources referred to the recommendations of the FTO in complaint No.0012/0M/2024 and letter received from office of the Accountant General Pakistan Revenues.
The FTO has recommended that the SAP module be updated to facilitate tax adjustments and credits or salaried- individuals and pensioners, thereby avoiding lengthy refund processes. Additionally, a monitoring mechanism should be established to prevent potential misuse withholding stage. The SAP stands for Systems, Applications, and Products in Data Processing.
Taking this into account, a meeting chaired by the Accountant General Pakistan Revenues (AGPR) was held in his office. The AGPR agreed, in principle, with the proposal, however, he said that the same will be discussed in the internal meeting of the AGPR planned during current month.
It was highlighted that tax will be adjusted up to the tax liability of the AGPR and that details of the sections under which tax deducted is adjustable have to be provided by the Federal Board of Revenue.
The implementation of the recommendations and further meetings with the office of the AGPR may involve policy-level decisions. The AGPR has request the FBR that the IR (Policy) wing may make further correspondence the matter with the AGPR, the AGPR added.
Presently, 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.
It was observed during investigation by the FTO that all of the complainants (salaried individuals) 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.
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.
The FTO had 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 Income Tax 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, the FTO order added.
Copyright Business Recorder, 2024
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