The Federal Tax Ombudsman has directed the Federal Board of Revenue (FBR) to develop a transparent IT solution to assist taxpayers and withholding agents.
The complaint was filed due to hardships caused by the process of verifying tax challans in terms of withholding tax on property transfers. The complainant stated that they must go through a lengthy process to obtain PSIDs, make a deposit in a bank, obtain challans, and then deliver it to the FBR office to be endorsed and verified.
The FBR authorities had ordered the property registering authorities not to register the transfer until the tax challans were verified at the FBR Office in Quetta.
Furthermore, the FBR has delegated powers to withhold authorities and they are limited to audit, but the FBR has pre-conditioned transfer registration with the verification of tax challans by FBR Authorities. There is no legal requirement for FBR officials to verify tax challans, and no tax law requires withholding authorities to have tax challans verified by FBR offices.
The FTO referred the complaints to the secretary of Revenue Divisions for comment in this regard. According to the Commissioner, RTO, Quetta, the regional tax office had left no stone unturned in providing full-fledged facilitation and easing the PSIDS and tax payment processes for general taxpayers.
During the audit, however, a massive amount of short deductions and non-deductions in taxes charged on the transfer of property were discovered. The concerned withholding authorities maintained that they were unfamiliar with FBR taxes and that their staff was inefficient in this regard.
The withholding authorities sought assistance to prevent such malpractices. It was also argued that CPR verification was contingent on persistent demand from property registering authorities, who were unfamiliar with the proper application of rates, generation of PSIDs, and authentication of tax challans.
While concluding the complaint, the FTO noted that RTO Quetta’s specific administrative intervention in monitoring withholding taxes on properties is unique to the rest of the country’s IR formations. Regardless of the reasons advanced by RTO Quetta, an additional forum established without the formal approval of the FBR appears unnecessary.
Though the FBR has the authority to pre-audit withholding taxes, it also has the responsibility to assist taxpayers, which can be easily ensured through the use of technology. Ideally, the FBR should conduct a post-audit using CPRs from its database.
As a result, FTO has directed FBR to install appropriate operational software in the offices of all withholding agents responsible for property transfers, reducing human discretion in the application of valuation rates and tax calculation.
In its findings, FTO also urged FBR to develop and implement foolproof mechanisms for timely post-audit of CPRS across the country.