Karachi, April 20, 2025 – A new report from the Federal Tax Ombudsman (FTO) has highlighted that employees working on a daily wages basis are subject to income tax deductions under Section 149 of the Income Tax Ordinance, 2001.
According to the FTO’s detailed analysis, the definition of salary under the Income Tax law includes any amount received by an employee from their employment. This encompasses not only regular pay but also other forms of remuneration such as leave pay, overtime, bonuses, commissions, gratuities, and work condition supplements. Therefore, daily wages employees fall under this broad definition, meaning they too are liable for tax deductions just like their permanent counterparts.
The FTO report emphasized that all employees, regardless of their employment status—whether regular, temporary, contractual, or employed on daily wages—are entitled to be taxed as salaried individuals under Section 149. This provision ensures that employees working on a daily wages basis are treated equitably within the broader tax system.
The recognition of daily wages employees under Section 149 is crucial for expanding the tax base and ensuring that all sectors of the workforce contribute fairly to national revenue. The FTO’s findings urge both employers and employees to ensure that income tax is appropriately deducted at source for daily wages workers, just as it is for other salaried employees.
Additionally, the report pointed out that employers should be vigilant in complying with tax regulations, as failure to properly deduct taxes from employees on daily wages could lead to legal repercussions.
In conclusion, the FTO’s statement serves as a reminder that all employees, regardless of their employment type, are subject to the same tax regulations. The clarification ensures greater fairness and consistency in tax collection, ultimately contributing to the nation’s fiscal health.
The FTO referred to the Section 12(2) of Income Tax Ordinance, 2001.