ByFBR’s tax recovery notices to salaried individuals raise legal concerns. Experts urge accountability for employers, not employees. Learn more here.
The Federal Board of Revenue (FBR) has recently come under scrutiny for issuing tax recovery notices to salaried individuals, raising concerns over the legality and fairness of such actions. Many experts argue that these notices unfairly burden employees whose taxes are already deducted at source by their employers.
Pressure to Meet Revenue Targets
Reports indicate that Large Taxpayer Offices (LTOs) and Regional Tax Offices (RTOs) are under significant pressure to meet monthly revenue targets. As a result, FBR’s field formations have started issuing show-cause notices under Section 162 of the Income Tax Ordinance, 2001, targeting employees for allegedly unpaid withholding taxes under Section 149. The notices require salaried individuals to furnish Computerized Payment Receipts (CPRs) as proof of tax payments made by their employers.
Unrealistic Deadlines for Compliance
A particular instance highlighted involves the tax department in Karachi, which issued electronic notices on January 28, with a deadline of January 31. This gave employees merely two days to respond, an impractical timeline for gathering necessary documentation. Tax professionals have criticized this approach, stating that employees generally rely on annual tax deduction certificates issued by their employers and should not be expected to retrieve individual CPRs from banks.
Legal Perspective: Holding Employers Accountable
Legal experts assert that, in cases where an employer has failed to properly withhold or deposit tax, the FBR should first initiate proceedings against the employer under Section 161. Only if the employer fails to comply should the burden be shifted to the employee. However, bypassing this process and directly targeting employees contradicts established tax regulations and creates unnecessary stress for taxpayers.
Concerns Over Timing and Motivation
Additionally, concerns have been raised regarding the timing of these notices. Issued at the end of the month, these demands appear to be an attempt to fulfill revenue collection targets rather than a genuine effort to enforce tax compliance. Given that salaried individuals constitute a major portion of Pakistan’s tax base and already contribute a significant share of tax revenue, these actions are seen as unfair and legally questionable.
Call for a Fairer Approach
Many tax professionals and affected individuals are calling for the FBR to reconsider its approach. They urge the tax authorities to focus on ensuring employer compliance rather than penalizing employees who have no control over tax deposit processes. Until the matter is resolved, affected employees may need to seek legal or professional assistance in responding to these notices.
Staying Informed and Seeking Assistance
As developments unfold, it remains crucial for taxpayers to stay informed and vigilant about their rights and obligations. For those who have received such notices, consulting a tax professional and reviewing the legal framework may be the best course of action to ensure compliance while also protecting their interests.
