Islamabad: In a significant move to simplify tax processes for salaried individuals, the Federal Tax Ombudsman (FTO) has recommended adjustments to the SAP (Systems, Applications, and Products in Data Processing) module used by the Accountant General Pakistan Revenues (AGPR). These changes aim to streamline tax adjustments and credits, reducing excessive deductions and eliminating lengthy refund procedures.
Currently, salaried individuals face excess withholding tax deductions under Section 149 of the Income Tax Ordinance, 2001, even when they qualify for tax credits under Clause (2) of Part III of the Second Schedule. The FTO found that this mismanagement arises from outdated procedures at the District Account Offices (DAOs), which fail to align with legislative intent.
To address this, the FTO has suggested that the AGPR and the Federal Board of Revenue (FBR) collaborate to update the SAP module. The changes will enable automatic tax adjustments and credit allocation, ensuring compliance with legal provisions and providing timely relief to taxpayers.
During a recent meeting chaired by the AGPR, the proposal received initial approval. The AGPR emphasized the need for further internal discussions and requested that the FBR’s Inland Revenue (Policy) wing continue correspondence to finalize the adjustments.
The FTO also urged the FBR to establish a monitoring mechanism to prevent misuse of the system at the withholding stage. These reforms are expected to offer salaried individuals and pensioners smoother tax credit processes and reduce dependency on refund claims under Section 170 of the Income Tax Ordinance.
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