The Federal Board of Revenue (FBR) announced on Friday the promotion of 35 officers from the Inland Revenue Service (IRS) from BS-17 to BS-18 on a regular basis, effective immediately.
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FBR fails to remove return filing glitches; KTBA seeks legal time
A leading tax bar on Friday pointed out failure of the Federal Board of Revenue (FBR) in removing errors/glitches in the return filing as only a week left for the last date.
Karachi Tax Bar Association (KTBA) in its letter to FBR chairman and other higher authorities to resolve issues in online return filing for tax year 2022. “A proper legal time for compliance should be allowed as per the statute after resolving these problems,” KTBA President Syed Rehan Hasan Jafri said in the letter.
READ MORE: FBR advised to fix glitches for smooth filing of income tax returns
It is pertinent to mention that the last date for return filing for tax year 2022 is September 30, 2022. About two days ago the Pakistan Tax Bar Association (PTBA) also pointed out similar issues but the problems are remained unresolved.
Rehah Jafri said that none of the issues had been addressed as yet and, therefore, the pace of compliance of filing the Tax Returns is very slow. The KTBA previously sent communication to the FBR on September 6, 2022.
Through instant letter the KTBA highlighted some issues further, which have been raised and discovered by our Members after our first letter of 06 September, 2022.
READ MORE: Dental practitioners directed to get sales tax registration
Column for Adjustment of Brought Forward Capital Losses
Column for adjustment of brought forward capital losses under the head of capital gains is not available in Income tax return form due to which tax on capital gain cannot be calculated correctly.
Column of Tax Credit for Specified Industrial Undertakings U/S 65G Inadvertently Available in Salaried Individual Return
The Column of tax credit for specified industrial undertakings u/s 65G of the Income Tax Ordinance, 2001 is inadvertently available in the Tax Credits Annexure of income tax return for salaried individuals, which has no correlation with such tax credit.
Non-Availability of Reduced Tax Rate on Contract Receipts
Although the rate of tax on contract receipts under section 153 was reduced from 7.5% to 7% for Tax Year 2022, however, there is no column for such reduced rate in the return for the TY 2022 available on IRIS.
Insufficient Time for Taxpayer Filing Manual Return Forms
The draft of manual return forms for the Individuals and AOPs for the Tax Year 2022 was issued belatedly on August 26, 2022, whereas the final SRO. 1733(1)/2022 was issued on September 13, 2022 meaning thereby only 17 days of time has been allowed to file the manual returns, which is insufficient as provided under the law.
READ MORE: Tax rates on profit from bank deposits during year 2022/2023
Erroneous Tax Calculation on Gain of Immovable Property
The IRIS portal is calculating incorrect tax liability on gain on sale of immovable properties in violation of section 37(1A) of the Income Tax Ordinance, 2001 which needs to be taken care off as soon as possible.
Incorrect Tax Calculation on Profit on Debt
The IRIS portal is calculating incorrect tax on profit/yield on Bahbood Certificates/ Pensioner’s Benefit Account/ Shuhada Family Welfare Account in violation of clause (6) of Part-III, 2nd Schedule of the Income Tax Ordinance, 2001, which provides that tax shall not exceed 10 percent of such Profit/ Yield.
Error in Statement of Foreign Income & Assets u/s. 116A of the Ordinance for Non-Resident Individuals
There lies no option list in drop downs country and currency under Code “7006” having description “Investment (Non-Business) (Account / Annuity / Bond / Certificate / Debenture / Deposit / Fund / Instrument / Policy / Share / Stock / Unit, etc.)” due to which a taxpayer remains unable to file the Foreign Income & Assets Statement under section 116A(1) of the Ordinance.
READ MORE: Up to 70% income tax imposed on dividends for year 2022-2023
Opening Wealth appearing in Wealth Statement
Opening wealth is being shown in “Reconciliation of Net Assets” Value of opening net assets is being shown under code ‘703002’ despite the fact that the taxpayer’s residency status is selected as “non-resident” for Tax Year 2022 after which, he should not be required to file the wealth statement including reconciliation of net assets.
Column Code 64330052 (Dividend u/s 150 @25%) is missing in Salary Return Form
The withholding rates on payment of Dividend @ 7.5%, 15% and 25%, (under section 150 of the Ordinance) are appearing in the Income Tax Return Form of “Income for a person deriving income only from salary and other sources and the Column Code 64330052 (Dividend u/s 150 @25%) is missing.
Erroneous Calculation of Written Down Value
Proviso was inserted under section 22(2) of the Tax Ordinance by Finance Act, 2020 whereby depreciation on additions to fixed assets made after 01-Jul-2020 would be reduced by 50% However, when entries related to written down values are entered in in depreciation schedule as opening values, the IRIS is calculating depreciation at 50% on total values.
READ MORE: FBR updates salary tax card for year 2022-2023
No column for refund adjustment
In addition to above, what lately has been done by FBR is that it has deleted the column of “Adjustment of Refunds”, which is certainly an afterthought while the Manual Tax Returns, which were issued vide SRO 1612(I)/2022 dated 26 August, 2022 do retain the “Column of Tax Return Refund”. There is no explanation or justification for this glaring disparity, which is to be taken care off the clarification of Taxpayers.
Online Refund Adjustment Column is still not available on Return loaded on IRIS irrespective of the fact that it is available in the SRO issued by Board.
Income attribution with respect to minimum taxation u/s. 153
Profit on debt/interest income on government securities is subject to FTR
Initial depreciation allowance on plant & machinery u/s. 23
Revised Wealth Statement u/s 116(3) is not imported
Simplified Return for SMEs
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Customs appraising officer awarded ‘dismissal from service’
ISLAMABAD: Federal Board of Revenue (FBR) on Wednesday awarded major penalty of ‘dismissal from service’ upon an appraising officer of Pakistan Customs on the charges of misconduct.
According to an official notice, the FBR stated disciplinary proceedings were initiated against Syed Imtiaz Hussain Shah, Appraising Officer (BS-16), Directorate of Post Clearance Audit (North), Islamabad by the Authority/Member (Admn/HR) by issuing order under Rule-7 read with Rule-6 of the Civil Servants (Efficiency & Discipline) Rules, 2020 dated July 20, 2022 on account of acts of omission and commission constituting “Misconduct” under Rule- 3(b) read with Rule-2(1)(K) of the Civil Servants (E&D), Rules, 2020.
READ MORE: Outbound passengers to declare currency above $5,000
A Show Cause Notice was served upon Syed Imtiaz Hussain Shah, Appraising Officer (BS-16). In response to the Show Cause Notice, the accused submitted defence reply to the Authority on August 16, 2022 along with the request for personal hearing.
The Member (Admn/HR) / Authority afforded an opportunity of personal hearing to the accused on September 08, 2022.
READ MORE: Dental practitioners directed to get sales tax registration
After having gone through the case record including reply to Show Cause Notice, verbal submissions made by the accused during the personal hearing and other relevant record, the Member (Admn/HR) being Authority in this case, is of the considered opinion that the charges of “Misconduct” stand established against the accused.
READ MORE: Tax rates on profit from bank deposits during year 2022/2023
Therefore, the Authority Member (Admn/HR) has decided to impose a major penalty of “Dismissal from Service” upon Syed Imtiaz Hussain Shah, Appraising Officer, Directorate of Post Clearance Audit (North), Islamabad under Rule- 4(3)(e) of the Civil Servants (E&D) Rules, 2020.
The officer will have a right to appeal against this Order to the Appellate Authority under Civil Servants (Appeals) Rules, 1977 within a period of 30 days from the date of communication of this Notification.
READ MORE: Up to 70% income tax imposed on dividends for year 2022-2023
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Outbound passengers to declare currency above $5,000
Federal Board of Revenue (FBR) Wednesday issued draft rules to make it mandatory for outbound passengers to make declaration of currency amounting above $5,000.
The FBR issued draft amendment to Baggage Rules, 2006 by issuing SRO 1751(I)/2022 dated September 20, 2022.
READ MORE: Rupee ends near historic low; Dollar gains to PKR 239.65
The revenue body said that the draft rules had been published for information of all persons likely to be affected and notice is also given that objections or suggestions may for consideration of the board should be sent within seven days of the draft amendments.
According to the amendment, in case of accompanied baggage, the outbound passenger who is in possession of foreign currency exceeding $5,000 of equivalent, any other prohibited or restricted item or any other item requiring declaration before Customs, shall file a declaration before or on departure, electronically in the WeBOC or manually.
READ MORE: PKR falls for 13th session as dollar ends near record high
Similarly, the incoming passenger who is in possession of foreign currency exceeding $10,000 or equivalent, any other prohibited or restricted item or any other item requiring declaration before customs shall file a declaration.
Earlier, on September 11, 2022, the FBR issued a clarification stating that a misleading impression has been created in some section of the press that Pakistan has recently imposed currency declaration requirements for passengers coming into Pakistan, which is contrary to facts. Unlike portrayed by some section of the press, the mandatory requirement for passengers coming into Pakistan and bringing currency and/or negotiable instruments was notified by the State Bank of Pakistan more than 10 years ago vide notification no. F.E.1/2012-SB dated 16th June 2012. This requirement came into force on July 01,2012.
READ MORE: PKR plunges for 12th session; Dollar ends at PKR 237.91
Subsequently, in order to widen the scope of declaration to include gold jewelry, precious stones and other prohibited/ restricted goods, Pakistan Customs also introduced a comprehensive “Customs Declaration Form for Passengers” which was notified vide SRO 689(I)/2019 dated 29th June, 2019. These rules cover both the incoming and outgoing passengers.
These requirements for declaration are in line with international standards and the best practices adopted by most of the countries in the world. The passengers can make the declaration either manually at the Customs counter or electronically in the Customs System. In order to increase awareness amongst the international passengers, Pakistan Customs has been collaborating with the Civil Aviation Authority, Airlines, and Immigration Authorities to improve its outreach for both departing and arriving passengers. As a result, the compliance has been steadily increasing.
READ MORE: Dollar rallies for 11th straight session; ends PKR 236.84 at interbank
FBR has further reiterated that the currency declaration regime for all international passengers has been in field for more than a decade, rather than being recently introduced on account of any recent FATF review requirements.
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Dental practitioners directed to get sales tax registration
KARACHI: Sindh Revenue Board (SRB) has directed dental practitioners to get registered for sales tax to avoid penal action.
The SRB in a circular issued September 21, 2022, said that the services of cosmetic dental surgery, orthodontics, aesthetic dentistry and such other cosmetic and aesthetic dental procedures are taxable services under tariff heading 9842.0000 of the Second Schedule to the Sindh Sales Tax on Services Act 2011 as per the definition provided under section 2 (29A) of the Act, 2011.
READ MORE: FBR advised to fix glitches for smooth filing of income tax returns
All Dental Practitioners providing the aforesaid taxable services are therefore advised to get e-registered with SRB by visiting www.e.srb.gos.pk and following the step by step procedure after entering the SNTN.
The service providers are also directed to charge, levy, and collect due Sindh sales tax at 13 per cent on the aforesaid taxable services and deposit the same in Sindh Government’s head of account “B-02384” in the prescribed manner.
READ MORE: Tax rates on profit from bank deposits during year 2022/2023
It further said that e-deposit the due amount of SST in any SRB-authorized branch of NBP by 15th of the month following the tax period to which it relates.
The dental practitioners are also advised e-file true and correct Sindh sales tax returns in Form SST-03 as prescribed under section 30 of the Act, 2011 by 18th of the month following the tax period to which it relates.
READ MORE: Up to 70% income tax imposed on dividends for year 2022-2023
For Example: Return filing and SST payment for the month of September is due on 15th and 18th of October, respectively.
The SRB said that full and timely compliance of above provision of law is expected and will be appreciated to avoid any penal action and legal consequences by the board.
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FBR advised to fix glitches for smooth filing of income tax returns
Pakistan Tax Bar Association (PTBA) has urged the Federal Board of Revenue (FBR) to fix glitches in Iris portal for smooth return filing for tax year 2022.
In a letter sent to FBR chairman, the PTBA advised that the taxpayers should be provided the statutory period of clear 90 days for submission of their income tax returns from the day the Iris – the portal – is error free.
READ MORE: Tax Return becomes invalid on depriving refund adjustment: PTBA
The apex tax bar stated that the matter regarding filing of income tax returns for tax year 2022, it endorsed the observations about system errors / glitches highlighted by the regional affiliated bars, including Karachi Tax Bar Association (KTBA).
“Till to date the present IT team has failed in providing the efficient, user friendly and hassle free IT system in professional manners,” it added.
The PTBA informed the FBR chairman that as per law the taxpayer is entitled to claim adjustment of his previous refunds against tax liability for the current tax year but the relevant column for adjustment of refund has illegally been locked, which is against the fundamental rights and present scheme of law under the Income Tax Ordinance, 2001.
Similarly, the draft of manual return of income for the individuals and Association of Persons (AOPs) for the Tax Year 2022 was issued as late as on August 26, 2022, whereas the final SRO 1733(I)/2022 was issued on September 13, 2022. “It means only 17 days have been allowed to file the manual returns, which is insufficient as provided under the law,” the PTBA pointed out.
READ MORE: Tax rates on profit from bank deposits during year 2022/2023
It further pointed out that the income tax return form introduced for SMEs sector has been issued on the IRIS system without sharing a draft, which is mandatory under the law. “The simplified return for SME uploaded without issuing the draft return, the same may lead to illegality,” the PTBA said and suggested that issue draft following by final return should be issued to meet with the requirement of the law.
The PTBA said that the IRIS portal is calculating incorrect normal as well as initial depreciation allowance on purchase of plant and machinery against the provision of Section 23 read with the Part II of Third Schedule of the Income Tax Ordinance, 2001.
The IRIS portal is calculating incorrect/excess tax liability on gain on sale of immovable properties in violation of Section 37(1A) of the Income Tax Ordinance, 2001.
It is noted that rate of tax collection under section 153(I)(c) for individuals and AOPs contractors is 7 per cent, which is minimum tax. “In the relevant part of return for working of attributable income neither there is any row having rate at 7 per cent rate of tax nor the system is allowing credit to the said deduction.
Presently, IRIS portal is calculating the incorrect tax liability on income covered under Section 153 of the Ordinance, on the basis of fixed/predefined wrong formulas due to which the taxpayers are bound to pay high tax instead of their actual tax liability, which is against the spirit of self-declaration and present scheme of law. “De-freezing of attribution and enabling the taxpayers to enter correct figures/data to filed their return in time may resolve the issue,” the PTBA suggested.
READ MORE: Up to 70% income tax imposed on dividends for year 2022-2023
The apex tax bar highlighted that the IRIS portal is calculating incorrect tax at profit/yield Bahbood Certificates / Pensioner’s Benefit Account / Shuhada Family Welfare Account, whereas clause (c) of sub-section (I) of Section 39 provides that tax shall not exceed 10 per cent of such profit/yield read with clause (6) of Part-III of Second Schedule of Income Tax Ordinance, 2001.
The IRIS portal is treating normal income for the tax year 2022 instead of final income at interest/profit on debts on government securities as per clause (20( of Part III of Second Schedule of the Income Tax Ordinance, 2001, wherever, the said clause was omitted through Finance Act, 2022 and is applicable for the tax year 2023, which cannot be applicable retrospectively.
READ MORE: FBR updates salary tax card for year 2022-2023
The PTBA said that the taxpayers in general and legal fraternity in particular are facing acute hurdles in preparation of tax payment challans because response of the system in this regard is dead slow. “Most of the time it requires many attempts for preparation of the tax challan due to website issue and preparation of tax challan in single attempt is difficult and it is very common practice/issue faced by almost every taxpayer while preparing the tax challan, hence the website/system issue should be resolved immediately and sufficient time is also required for timely filing of returns.”
In cases where revised wealth statement under Section 116(3) of the Income Tax Ordinance, 2001 for the tax year 2021 resulting into change in closing balance of net wealth for the tax year 2021 has been filed, the system does not carry forward opening balance of net wealth for the tax year 2022 (showing the opening balance of original wealth statement of last year’s closing balance).
Lastly, the PTBA pointed out issue regarding the downloading of computerized payment receipt (CPR) and statement that the system shows message ‘challan/CPR does not exist’ against the valid CPR duly deposited in the national exchequer.
READ MORE: FBR issues withholding tax rates on imports for tax year 2022-2023
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Tax rates on profit from bank deposits during year 2022/2023
Federal Board of Revenue (FBR) has issued latest tax rates on profit from bank deposits derived during the year 2022/2023.
The FBR issued the withholding tax card for tax year 2023 (July 01, 2022 to June 30, 2023) after amending the Income Tax Ordinance, 2001 through changes brought through Finance Act, 2022.
The FBR collects tax on profit on debt under section 151 of the Income Tax Ordinance, 2001. It issued the rates applicable for both persons on the Active Taxpayers List (ATL) and those who are not on the ATL.
According the latest rates, 15 per cent of the tax is applicable on the persons who are on the ATL and 30 per cent is to be paid by persons not on the ATL while receiving profit on debt falling under clause (a), (b), (c) or (d) of Sub-Section 1 of the Section 151.
The clauses a, b, c and d of the sub-section 1 of section 151 are:
(a) a person pays yield on an account, deposit or a certificate under the National Savings Scheme or Post Office Savings Account;
(b) a banking company or financial institution pays any profit on a debt, being an account or deposit maintained with the company or institution;
(c) the Federal Government, a Provincial Government or a Local Government pays to any person profit on any security other than that referred to in clause (a) issued by such Government or authority; or
(d) a banking company, a financial institution, a company referred to in sub-clauses (i) and (ii) of clause (b) of sub-section (2) of section 80, or a finance society pays any profit on any bond, certificate, debenture, security or instrument of any kind (other than a loan agreement between a borrower and a banking company or a development finance institution) to any person other than financial institution.
The FBR further noted that profit on debt on Sukuk by SPV or a company under sub-section (1A) of Section 151 of Income Tax Ordinance, 2001, the withholding tax rates shall be as follow:
— Company in case of ATL 25 per cent and non-ATL 50 per cent.
— Individual, Association of Person (AOP) return above Rs 1 million the tax rate for ATL shall be 12.5 per cent and in case of non-ATL the tax rate shall be 25 per cent.
— Individual, AOP return below one million rupees the tax rate shall be 10 per cent for ATL and in case of non-ATL the tax rate shall be 20 per cent.
The Sub-Section (1A) of Section 151 of the Income Tax Ordinance, 2001, is:
(1A) Every special purpose vehicle or a company, at the time of making payment of a return on investment in Sukuks to a Sukuk holder shall deduct tax from the gross amount of return on investment at the rate specified in Division IB of Part III of the First Schedule.
READ MORE: Up to 70% income tax imposed on dividends for year 2022-2023
READ MORE: FBR updates salary tax card for year 2022-2023
READ MORE: FBR issues withholding tax rates on imports for tax year 2022-2023
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School children to promote income tax return filing
The school children have started motivating their parents to file income tax returns for Tax Year 2022. In this regard Saint Patrick’s High School, Karachi asked a question in the assembly session on September 19, 2022 about the last date of filing income tax return.
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Last date for return filing will not be extended: FBR
ISLAMABAD: Federal Board of Revenue (FBR) on Monday said it will not extend the last date for filing income tax returns beyond September 30, 2022.
The FBR sent SMS to taxpayers advising them to file their return of income for the tax year 2022 at the earliest. “The last date to file return is September 30, 2022, which will not be extended,” it added.
READ MORE: Last date for filing tax return is September 30, FBR reminds
The revenue body recently launched a campaign to motivate people for filing income tax returns. The FBR said: “Like every year before, the FBR launched a comprehensive awareness campaign to maximize its outreach through electronic and print media, urging taxpayers both existing and new, to file Income Tax Returns on time. The last date to file returns is September 30, 2022.”
The FBR issued an alert about the last date stating that last date to file income tax returns will not be extended. “Last date to file income tax returns for individuals and association of persons (AOPs) is September 30, 2022,” the FBR added.
READ MORE: Disclosure of beneficial ownership made mandatory for companies
The revenue body said that income tax returns can be filed through: Tax Asaan APP and FBR website.
It further stated that tax payment is possible through: internet and mobile banking; credit card and ATMs; cash and bank account.
The FBR further urged the taxpayers to file tax returns and avail exemption from 100 per cent increased withholding tax rates.
The tax body highlighted mandatory income tax return filing for persons and corporate entities.
The FBR said that all resident persons registered with professional bodies, i.e. chamber of commerce, Pakistan Bar Council or Market Committee etc. are required to file income tax returns.
READ MORE: KTBA highlights pharmaceutical industry’s reporting issues
Association of persons and Individuals having more than Rs400,000 annual business income are also required to file their return of income on annual basis.
“The income tax return filing is must for salaried persons if annual income exceeds Rs600,000,” the FBR added.
The revenue body said that the income tax return filing for tax year 2022 is also mandatory for persons who were charged to income tax in tax years 2020 and Tax Tear 2021.
Furthermore following persons are required to file income tax return:
— Persons having National Tax Number (NTN)
— Persons who own a motor vehicle having engine capacity more than 1,000CC
— Persons who own 500 sq. yards or more property / flat in urban areas.
READ MORE: FBR directs speedy clearance of flood relief goods
— Owners of flat with 2,000 sq. feed covered area of 500 sq. yards or more land in FBR rating area.
— All Non for Profit Organizations (NPOs) or welfare organizations that fall under Income Tax Ordinance, 2001.
— Commercial and Industrial consumers paying more than Rs500,000 electricity bill annually.
— Resident persons required to file foreign income and assets statement.
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Pakistan tax agency invites job applications for audit department
Pakistan tax agency has invited job applications to fill around 57 vacant posts at its internal audit department.
Federal Board of Revenue (FBR), the premier tax agency of Pakistan, said that the vacant posts would be filled in BS-1 to BS-16. It said that the job applications must be submitted by October 02, 2022. Further details can be obtained HERE.
The FBR said that the eligible candidates are advised to apply online through National Job Portal Link https://njp.gov.pk. No manual or hard copy of application will be accepted by any office. Candidates applying for more than one post should apply online for each post separately.
READ MORE: Up to 70% income tax imposed on dividends for year 2022-2023
Vacancies for BS-01 to 05 shall ordinarily be filled on local basis in terms of Rule 16 of Civil Servants (Appointment, Promotion & Transfer) Rules, 1973, whereas vacancies for BS-06 to 15 shall be filled by appointment of persons domiciled in the respective province or region of each office strictly under Rule 15 of the aforesaid rules and instructions issued by the Establishment Division from time to time.
Candidates will be required to bring original documents (Educational, domicile and Experience Certificate etc) alongwith one set of all attested copies of documents at the time of test/interview.
Screening tests and skills tests (where required) will be conducted as per recruitment policy of the Federal Government.
READ MORE: FBR updates salary tax card for year 2022-2023
The contract employees (BS-01 to 15), who were appointed under the Family Assistance Package for the families of Government employees, who died while in service, may also apply online for any of the above post, if they desire so, subject to their eligibility.
10% quota for women, 5% quota for minorities (non-Muslims) and 2% quota for disabled persons shall also be strictly observed as per Government instructions. Disabled persons will have to submit a Certificate as proof of disability, duly issued by recognized Social Welfare Board/office or other authorized Government organization, at the time of test/interview.
The Directorate General, Internal Audit (IR) reserves the right not to fill any vacancy or to reduce/increase the number of vacancies, if the circumstances so warrant at the time of final selection.
The candidates working in Public Sector Departments/Organizations shall have to submit Departmental Permission Certificates from the respective employers at the time of test/interview, failing which they will not be allowed to participate in test/interview process.
In addition to 05 years general upper age relaxation by the Government, further upper age relaxation shall be restricted upto the following categories
READ MORE: FBR issues withholding tax rates on imports for tax year 2022-2023
Minimum and Maximum age shall be calculated on the closing date of receipt of applications.
Information provided in the online Application Form will be verified. In case of any false or forged information, the Directorate General, Internal Audit (IR) reserves the right to cancel candidature of any candidate at any stage (even after employment, if so revealed later) and to initiate legal action against the applicant.
Only short-listed candidates will be called for test/interview. All the candidates will be allowed to appear in the test/interview on provisional basis, subject to detailed scrutiny of their eligibility as per relevant criteria.
No TA/ DA will be admissible for the Test/ Interview.
The candidates may apply online on or before 02-10-2022. Applications received after 02-10-2022 will not be entertained.