FBR New Tactics for Tax Recovery Spark Controversy

The Federal Board of Revenue (FBR) is facing backlash after its field offices reportedly began issuing tax recovery notices to salaried individuals, allegedly as a way to meet their revenue targets. According to experts, these notices are unjust, as salaried employees already have taxes deducted directly from their wages by employers each month.

Sources indicate that both Large Taxpayer Offices (LTOs) and Regional Tax Offices (RTOs) are under intense pressure from the FBR to achieve monthly revenue collection quotas. Consequently, these offices have started sending show-cause notices under Section 162 of the Income Tax Ordinance, 2001, claiming that tax deductions made under Section 149 were excessive. The notices instruct employees to provide bank payment receipts (CPRs) from their employers.

In one instance, the tax department in Karachi issued an electronic notice on January 28 with a compliance deadline of January 31, giving taxpayers just two days to respond.

Experts have criticized these demands as unreasonable, noting that salaried workers typically rely on the annual tax certificates provided by employers, and shouldn’t be expected to retrieve CPRs from banks.

A tax consultant further pointed out that, by law, if an employer makes an error in tax deductions, the FBR should pursue recovery actions against the employer, not the employee, under Section 161. However, the FBR has bypassed this procedure and is now targeting employees directly, which goes against established tax rules