Tax officers barred from recovery on 10pc payment by taxpayers in first appeal

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ISLAMABAD: Federal Board of Revenue (FBR) has restrained tax officials from recovery in those cases where taxpayers paid 10 percent of outstanding amount and in filed a case before Commissioner Inland Revenue (Appeals).

The FBR in its explanation to Income Tax Ordinance, 2001 made through Finance Act, 2018 said section 140 of the Ordinance enables a Commissioner to recover outstanding tax due by a taxpayer from persons holding money on behalf of the taxpayer.
A proviso to sub-section (1) of section 140 of the Income Tax Ordinance, 2001 was introduced through the Finance Act, 2016 whereby Commissioner was restrained to issue notice for recovery of tax due during the pendency of first appeal under section 127 of the Ordinance provided that payment of 25 percent of the disputed tax demand has been made by the taxpayer.
In order to alleviate the difficulties faced by taxpayers in payment of outstanding demand during pendency of first appeal before Commissioner Appeals the minimum threshold of payment of tax has been reduced from payment of 25 percent of the outstanding demand to payment of 10 percent of the outstanding demand.
Therefore, if a taxpayer makes payment of 10 percent of the outstanding demand pending adjudication before the Commissioner (Appeals), recovery under section 140 of the Income Tax Ordinance, 2001 shall not be made.

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  • Commissioner IR or any official may not allowed for recovery of any tax liability from the tax payer before the final decision of the Commissioner IR (Appeals) instead of 10% payment. This may develops confidence to the foreign and domestic investors as well as all business community and especially new tax payers and they will feel secure themselves from the harassment of FBR officials.