The Karachi Tax Bar Association (KTBA) has urged the Federal Board of Revenue (FBR) to immediately withdraw show-cause notices issued to salaried individuals regarding tax recoveries.
Legal Concerns Over Issued Notices
In an official communication to Dr. Hamid Ateeq Sarwar, Member (Inland Revenue – Operations), the KTBA stated that these notices, issued under Section 162 of the Income Tax Ordinance, 2001, are unwarranted and legally untenable.
Allegations Against Salaried Taxpayers
KTBA President Ali A. Rahim raised concerns over these notices, which target hundreds of salaried taxpayers accused of claiming excessive income tax credits. He noted that such allegations typically stem from tax officers facing verification difficulties within the IRIS MIS system or struggling to recover withheld taxes from employers, who are responsible for tax deductions.
Salary Certificates as the Sole Tax Record
Rahim emphasized that salaried individuals rely on salary certificates provided by their employers when filing income tax returns, as per Rule 41 of the Income Tax Rules, 2002. Since these certificates serve as the only record of tax deductions, any discrepancies should be attributed to the employer rather than the employee.
Jurisdiction Overreach by FBR
“The issuance of these notices exceeds the jurisdiction prescribed by Section 162 of the Ordinance,” Rahim stated. “This section only authorizes notices if an employer fails to deduct or collect tax under Section 149. In this case, the tax has already been withheld and documented through salary certificates containing CPR details.”
Disproportionate Burden on Salaried Class
KTBA further highlighted the disproportionate tax burden on salaried individuals, who are taxed on gross earnings without exemptions or deductions. The issuance of these notices not only contradicts statutory provisions but also adds unnecessary distress to taxpayers.
Call for Immediate Action
The association has urged the FBR to instruct its field formations in Karachi to revoke these notices immediately and comply with the legal framework governing tax deductions. Failure to resolve this issue, KTBA warned, would cause undue anxiety among compliant taxpayers and undermine trust in the tax administration’s integrity.
KTBA remains committed to ensuring fair and lawful tax practices and advocating for the rights of Pakistan’s salaried class.
