Levying of double penalty: RTOs blamed for being obstinate towards withholding agents

Regional tax offices appeared to be intransigent in meeting their annual budgetary targets as withholding agents are being squeezed by double penalties on account of non-compliance of section 165 of Income Tax Ordinance-2001, it emerged here on Saturday.
According to sources, all withholding agents are required to file monthly statements along with the names of recipients and tax amount deducted on the payments for goods, services and execution of contracts.
Thereafter, tax offices carry out examination of the records submitted by withholding agents each year to assess whether tax had been deducted and deposited correctly into the exchequer within stipulated period and statements had been filed in the prescribed format. Moreover, sources said assessments for non-deduction, short deduction, late deduction or late filing of statements were conducted under section 161 and recoveries were made under section 205 of the Ordinance, which was also penal in nature.
However, default surcharge as prescribed in section 205 of the Income Tax Ordinance, 2001 is changed for non-deduction, late deduction or short deduction at the rate of 18 per cent per annum.
Besides, the withholding agents are also being squeezed under 182 (1A) of the Ordinance for non-filing of said statements with a penalty of Rs2,500 per day of default subject to minimum penalty of Rs10,000.
In addition to penal actions under section 182 (1A) and section 205 of the Ordinance, further penalty under section 182 (15) is also charged for not collecting or deducting tax with a penalty of Rs25,000 or 10 per cent of the amount of tax, whichever is higher, they added. The sources also pointed out double penalties were being imposed for each assessment order already made under section 161 and 205 of the Ordinance. Accusing the tax officers of using the said sections as source of revenue, sources said that this exercise was against the principles, which suggested that penal action should be invoked with due care and not be considered as a source of revenue.
Referring to the issue of double-penalty notices, sources urged the FBR to look into the matter and take remedial measures to resolve it.