FTO Addresses Non-Compliance in Tax Refund Case

The Federal Tax Ombudsman (FTO) has formally notified the Chief Commissioner Inland Revenue, Corporate Tax Office (CTO) Islamabad, to address alleged non-compliance by the Refund Officer regarding FTO’s mandated directives.

The President of Pakistan previously validated the FTO’s order. The core issue revolves around confirming withholding tax (WHT) and handling requests for tax refunds.

Tax lawyer Waheed Shahzad Butt commented that the officer’s actions are “not only regrettable but also a clear breach of established legal principles and judicial standards.” He emphasized that entities deducting advance tax under the withholding tax system function as representatives of the FBR. Consequently, any failure by these withholding (WHT) agents to provide timely confirmation to the Commissioner reflects negatively on the Commissioner, not the taxpayer.

Butt further explained that the complainants did not make direct tax payments; instead, withholding agents, including Customs during import, deducted and remitted the advance tax to the Federal Treasury. Examination of the Rule 42 certificates reveals that primarily corporate sector organizations and state-owned enterprises were responsible for tax deduction and deposit. Their records are readily accessible within FBR’s system through the integrated tax management system (ITMS).