FBR tells officials…: No direct deduction from provincial govt funds

KARACHI: The Federal Board of Revenue (FBR) chairman has strictly prohibited all chief commissioners of Inland Revenue from directly deducting provincial and federal consolidated funds. Inland Revenue Director General Mehmood Aslam, on behalf of the FBR chairman, told the officials concerned that a serious note had been taken of the practice of field formations that the Inland Revenue commissioners and their subordinate staff had been recovering outstanding tax demands against various government departments directly from the federal and provincial consolidated funds.

The letter said the practice should be stopped immediately, and in future no such recovery should be made without prior approval from the FBR chairman.

Earlier, in May this year, due to strong objections and protest by the Sindh government, the SBP had also restrained the FBR from direct deductions from the provincial government account. Some Rs10 billion plus had directly been transferred to the FBR from the Sindh government accounts by the SBP on account of withholding tax under Section 13-IB and 234 of Income Tax Ordinance 2001 and Section 48 of the Sales Tax Act 1990 for recovery of the government dues. Official documents revealed that SBP Deputy Chief Manager Muhammad Khalid had written to the FBR authorities that in terms of Article 121 (d) of the Constitution, direct deduction could not be made.

Sources in Sindh government told The News that the provincial government recently not only appointed a tax advisor to deal with the FBR tactics but also decided to approach the superior courts.  Sindh Excise and Taxation department also approached Tax Ombudsman against direct deduction from the Sindh government account.

In January this year, Sindh Chief Minister Murad Shah had written to Ishaq Dar, showing his discontentment on the issue and communicating the objections of Sindh regarding the direct deductions by the SBP.

The CM said in his letter that the provincial government did not agree with the assessments, made by the FBR officers on alleged assumptions. He quoted the figures of different departments, whose amount were deducted directly. According to figures, Rs6127.116 million were deducted of the Sindh Excise and Taxation Dept, Rs1.710 million of Sindh Information and Archives, Rs11.878m of Sindh Board of Revenue, Rs59.069 million of Mines and Minerals Department, Rs122.324m of Sindh Prisons Department, and Rs87.5m of Sindh Education Department. Secretary Sindh Excise and Taxation Department Abdul Haleem Sheikh  said after continuous negotiations with the FBR authorities, the matter had been resolved.