President Alivi rejects FBR Appeals : President Dr. Arif Alvi said on Monday that the Federal Board of Revenue (FBR) has filed 30 complaints against the Federal Tax Ombudsman’s decision ordering the FBR to stop taking excessive tax deductions from payroll instructors’ wages at the withholding stage.
I dismissed the same objection. While confirming the FTO’s decision, the President said that the withholding of 20% tax on his 36,000 rupee monthly lecturer salary, which was temporarily hired on semester-to-semester basis, was illegal and a fraudulent act of the FBR. He directed FBR not deduct excessive tax from the salaries of hired educational staff at post-graduate colleges for women, Bannu or other similar educational institutions .He further instructed the Peshawar District Tax Officer to review the case at hand in accordance with the relevant laws and to provide the necessary clarifications and instructions to all withholding officers to carry out his (President’s) decisions and report to the president within 45 days.
President Alivi rejects FBR Appeals on the claim that payments to staff instructors fall within the definition of “services” subject to a 20% withholding tax. He pointed out that Section 12 in conjunction with Sections 149 and 153(1)(b) of the Income Tax Regulations 2001 apply to wages earned by salaried workers in any of their forms of employment. H. Regular, temporary, temporary, daily wages, contingent liabilities, etc. are treated as “salary” and taxed as “salary income”. Salary teachers, like regular employees, temporary employees, temporary employees, daily wage employees, and emergency employees, are said to have a master-slave relationship with the recruiting agency. Moreover, the law considered their wages to be salaries and therefore could not be exempt from wage taxation. In his decision, the President said that given the circumstances and facts of the case, the FTO’s order was based on sound justification and sound legal grounds, and he therefore believed that the FBR’s allegations could have to be dismissed.