FTO Directs FBR to Recover Withholding Tax Shortfall from NHA

FTO Directs FBR to Recover Withholding Tax Shortfall from NHA

Islamabad: The Federal Tax Ombudsman (FTO) has directed the Federal Board of Revenue (FBR) to recover short-deducted withholding tax from the National Highways Authority (NHA) due to negligence by FBR’s field formations, as reported on July 1.

According to the details, a public interest complaint revealed that the NHA had not properly applied withholding taxes, resulting in significant unpaid amounts. The FTO ordered a comprehensive audit to recover the shortfall and directed the FBR to take legal action to rectify the violations. Additionally, the FTO highlighted discrepancies in withholding tax rates between the NHA and the Punjab Highway Department, requiring the NHA to pay the differential amount with an 18% surcharge.

The directive from the FTO comes after a thorough investigation into the complaint, which uncovered that the NHA had failed to adhere to proper withholding tax procedures. This negligence resulted in a substantial shortfall in tax collection, which the FTO has now mandated the FBR to recover. The order for a comprehensive audit indicates a rigorous approach to identifying and rectifying the shortfall, ensuring that all unpaid amounts are accounted for and recovered promptly.

The FTO’s order also stressed the importance of legal action against those responsible for the oversight. This move is intended to ensure accountability within the FBR’s field formations and prevent similar lapses in the future. By holding individuals and entities accountable, the FTO aims to reinforce the importance of adherence to tax regulations and the consequences of neglecting such responsibilities.

Furthermore, the discrepancies in withholding tax rates between the NHA and the Punjab Highway Department were highlighted as a significant concern. The FTO’s directive for the NHA to pay the differential amount, along with an 18% surcharge, underscores the need for uniform application of tax rates across different departments and entities. This measure is designed to address any inequities and ensure that all parties are compliant with the applicable tax laws.

The FTO’s actions reflect a broader commitment to ensuring transparency and accountability in tax collection and administration. By addressing the specific issue with the NHA and mandating corrective actions, the FTO is working to safeguard the public interest and ensure that government entities comply with their tax obligations.

In response to the FTO’s directive, the FBR is expected to expedite the audit process and initiate recovery actions. This involves scrutinizing the NHA’s financial records to identify the extent of the shortfall and implementing measures to recover the unpaid taxes. The FBR’s field formations will also be under increased scrutiny to ensure compliance and prevent future lapses.

The outcome of this directive will have significant implications for the NHA and other government entities. It serves as a reminder of the critical importance of proper tax compliance and the consequences of failing to adhere to established procedures. The FTO’s proactive approach in addressing the complaint and enforcing corrective measures is a step towards strengthening the integrity of the tax system in Pakistan.

The Federal Tax Ombudsman’s directive to the Federal Board of Revenue to recover the withholding tax shortfall from the National Highways Authority is a significant development in ensuring tax compliance and accountability. The comprehensive audit, legal actions, and measures to rectify discrepancies in tax rates reflect a robust approach to addressing the issue and safeguarding public interest. The FTO’s efforts underscore the importance of transparency and adherence to tax regulations, setting a precedent for other government entities to follow.

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