FTO Rules Teacher Exam Duties Should Be Tax Free

The Federal Tax Ombudsman (FTO) has ruled that government school teachers should not be subject to withholding tax under Section 153 (1) (b) of the Income Tax Ordinance for earnings from supervision, invigilation, and paper marking during board exams.

The Federal Board of Revenue (FBR) has been instructed to reclassify these earnings as salary under Section 149 and submit a compliance report within 60 days.

This decision follows grievances from teachers affiliated with the Board of Intermediate and Secondary Education (BISE) Gujranwala, who challenged the wrongful taxation of their payments as services rather than salaries.

The teachers, serving under the Punjab Education Department, argued that invigilation and paper checking were non-negotiable administrative duties, making them an extension of their regular responsibilities rather than freelance services. They emphasized that their earnings should be taxed under salary provisions instead of being subjected to withholding deductions.

Upon reviewing the case, the FTO acknowledged that these tasks are fundamental to the education system and should not be categorized as independent services.

The ruling highlighted that many of the affected teachers fall below the taxable income threshold but were still subjected to unjustified withholding tax deductions. This verdict underscores the FTO’s commitment to fair taxation practices and provides much-needed financial relief to teachers fulfilling board examination duties.