LAHROE: District Accounts Offices (DAOs) have informed the Federal Tax Ombudsman (FTO) that the FBR field formations have never issued any guidelines /instructions with regard to adjustment of taxes withheld from the salaried persons.
It was observed during investigation by the FTO office that all of the salaried persons 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.
All the DAOs are unanimous in opinion that presently the tax is being withheld through automated SAP system which only provides for monthly deduction on salary at average rate and final adjustment is made during the month of each June.
The SAP system has been configured by AGPR and FBR and adopted by the AG Punjab. Accordingly, the DAOs have expressed their inability to make any adjustment in the deductible taxes even if the salaried individuals provide the detail of tax deducted under various other withholding sections of the Ordinance.
The FTO had called for information from DAOs Multan, Khanewal, Muzaffargarh, D. G. Khan, Layyah and Rajanpur based on the complaints of academic teachers regarding excess tax deductions and subsequent ordeal faced by the taxpayers and hardships faced by salaried taxpayers.
According to an order issued by the FTO office, it is observed that the current withholding procedure of tax deduction is in vogue at DAOs level. It is not in conformity with the intent of the legislature as laid down under Section 149 of the Ordinance.
The FTO has directed that the FBR, AGPR, and AG Punjab to ensure 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. It has also required from the FBR to evolve a sound monitoring mechanism to ensure that the facility is not misused at withholding stage.
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