The Federal Tax Ombudsman (FTO) has directed the Federal Board of Revenue (FBR) and relevant authorities to implement a system allowing salaried individuals and pensioners to adjust taxes withheld at source against their tax liabilities.
The Issue:
Salaried taxpayers have been facing difficulties in adjusting taxes deducted under various provisions of the Income Tax Ordinance and tax credits against their overall tax liability. This often leads to excessive tax deductions and a complex refund process.
FTO’s Findings:
The FTO’s investigation revealed that:
- District Account Officers were unaware of the legal provision for tax adjustments.
- The existing system (SAP) did not accommodate the necessary adjustments.
- Salaried individuals were subjected to unnecessary financial hardship due to delays in tax refunds.
FTO’s Recommendations:
To address these issues, the FTO has recommended that:
- FBR, AGPR, and AG Sindh modify the SAP module to enable automatic tax adjustments.
- A robust monitoring system be implemented to prevent misuse of the adjustment facility.
- Clear instructions be issued to withholding agents regarding tax adjustments.
Impact on Taxpayers:
This decision is expected to provide significant relief to salaried individuals and pensioners by simplifying the tax adjustment process and ensuring timely credits. It will also enhance trust in the tax administration system.
Overall, the FTO’s intervention highlights the importance of efficient tax administration and the need for taxpayer-friendly policies.
