Chairman Federal Board of Revenue

LETTER FROM LETTER FROM MAHBOOB SHEIKH & CO., CHARTERED ACCOUNTANTS TO CHAIRMAN, FEDERAL BOARD OF REVENUE (Re: Hardship of Section 165 of Income Tax Ordinance, 2001) The Chairman, Federal Board of Revenue, Islamabad. SUBJECT: HARDSHIP OF SECTION 165 OF INCOME TAX ORDINANCE, 2001 Dear Sir, Prescribed person is required to deduct tax under sections 149, 153 etc. and has to furnish a statement to Commissioner under sections 149 and 165 as the case may be: Before June, 2010, prescribed person was obliged to furnish statement only if he has deducted the tax. By Finance Act, 2010 section 165 was amended by insertion of a proviso:-- "Provided that every person as provided in subsection (1) shall be required to file withholding statement even where no withholding tax is collected or deducted during the period". This amendment is made only to defeat the decision of higher courts and it has caused lot of inconvenience to the taxpayer. It is sheer wastage of time energy and money. The computer system of FBR is quite often out of order and it takes long to submit the information - a useless information. Tax deducted and statement furnished can serve the purpose of checking withholding tax whereas a NIL statement does not serve any purpose. Tax officers, may be under the instructions of FBR, are imposing penalty for non filing of NIL statement. They have made it source of generating revenue. The principle of levying penalty is to make the taxpayer to discharge its obligation of paying tax and no more. Penalty may be imposed if there is revenue loss to the Govt. Law is made for the convenience of the people and not to put them in trouble. This amendment is causing inconvenience to the tax payer and is useless for any purpose. There are many other important matters lying pending which need the attention of tax officers to which they are not. You are requested to instruct the field staff not to impose penalty to non filer of NIL statement under section 149 and 165 and they should not try to make it a revenue generating device. Kindly also delete this proviso in forthcoming Finance Act. It will be a great service to the nation.