The Federal Tax Ombudsman (FTO) has directed the Federal Board of Revenue (FBR) to rationalize the current tax withholding on examination duties and services to provide genuine relief to the low-paid teaching community.
The instructions were issued by FTO while giving a decision on a complaint against a deduction of 10 percent withholding tax on the payments received against examination duties of colleges and universities.
The FTO suggested that FBR should make examination services part of specified services having a 3 percent tax rate and raise the existing basic threshold of Rs. 30,000 should be increased to Rs. 1,000,000/200,000 per annum. In addition, categorizing instant Services as “Income Tax from Other Sources” u/s 39(1) of Income Tax Ordinance, 2001, was also recommended.
According to the findings of the FTO, the payment on account of examination duties is a supplemental income for the teaching community.
FBR’s withholding rates on services create a distinction between certain specified services and other services with tax rates ranging from 1.5 percent to 10 percent, it was further found.
Though FBR provides a threshold of Rs. 30,000, this limit is too meager to provide any genuine relief to the low-paid teaching community. Due to the peculiar nature of the job and its role in nation-building, the Teaching Community deserves non-discriminatory tax treatment, said FTO.
It is worth noting that the complainant, as a senior subject specialist at Quaid-e-Azam Academy for Educational Development, Sargodha has been filing income tax returns for the last 25 years. According to the complainant, the FBR deducted a withholding tax of 10 percent on the payment received against examination duties of colleges and universities, which is unjustified. Being a government employee, he pays all the taxes, i.e., SNGPL, electricity, mobile, etc. The complainant asked to be spared from such unjustified taxes.
