Federal Tax Ombudsman (FTO) has barred the Federal Board of Revenue (FBR) from illegal and excessive tax deductions from the pay/wages of low-income employees.
Addressing a press conference here on Wednesday, Senior Advisor Media and Income Tax, Majid Qureshi, informed ProPakistani that the FTO decision has facilitated all low-paid employees across the country.
FTO Advisor said that the FTO office has barred the FBR from excessive tax deductions from the pay/wages of the low-paid employees. The Federal Tax Ombudsman had issued Findings/Recommendations in the said complaint vide Order dated 24.02.2022. The Departmental Representative pleaded that “The question as to whether a person is an employee under a Master-Servant Relationship, or a service provider is a question of fact that needs to be established in each situation. Hence any such clarification of general nature is likely to be misused and may cause a loss of revenue.”
The FTO explained to the Departmental Representative that to determine the “Employer-Employee Relationship” for taxation under the Income Tax Ordinance, 2001, the basic parameter was the existence of a “Master-Servant Relationship” between the persons. It was further advised that Regular/Adhoc/Temporary/Daily Wages are all different shades and forms of employment, and the law does not create any distinction among all these forms.
Majid Qureshi stated that the FBR considered the Honorable FTO’s point of view, and resultantly, a clarification in this respect has been issued vide C.No. 3(3)/2022-S(CM)/81818-R dated 11.04.2022). The Findings/Recommendations issued by the FTO have now been fully implemented by FBR.
It may also be mentioned that the Accountant General of Pakistan Revenue has already implemented the above findings, as a result of which, all low-paid contract employees at FTO HQs office have received a salary for the month of March without deduction of income tax. In view of the foregoing, FTO has desired that all Advisors at Regional Offices should do the following:
- Widely publicize the subject Findings/Recommendations as public relief order.
- Ensure implementation through respective Districts Accounts Offices.
- The Regional Offices of the Account General of Pakistan Revenues may also be approached by the respective Regional Advisors at Peshawar, Lahore, Karachi, and Quetta for immediate implementation of the recommendations on the above lines.
