FTO recommends 20 percent increase in withholding tax rates

KARACHI: Federal Tax Ombudsman (FTO) has recommended 20 percent increase in adjustable withholding taxes in order to encourage income tax return filing.

However, this deduction of withholding tax should not apply on salary income, the FTO said in its recommendation for federal budget 2019/2020.

In order to encourage taxpayers to e-file income tax returns for claiming adjustment of adjustable withholding taxes, it was proposed that gradually all adjustable withholding taxes, excluding those on salary income, might be enhanced by at least 20 percent in the coming budget.

The FTO also proposed that all current non-adjustable withholding taxes may be converted into adjustable withholding taxes by amending the relevant provisions of the income tax laws/rules.

Further, in order to provide rights to taxpayers, the FTO said that a taxpayer should be given the right to approach the commissioner for the revision of assessment, as was available under original Section 138 of the Income Tax Ordinance, 2001.

The FTO further suggested that income from pension was exempted from income tax, but pensioners were not eligible to avail benefits of provisions of withholding tax unless they were on active taxpayers list. It was therefore proposed that pensioners deriving income from pension only, be exempted from the provisions of withholding taxes applicable to non-filers.

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