FTO directs car manufacturers to pay KIBOR plus 3pc interest payment on late delivery

The Federal Tax Ombudsman has directed car manufacturers to pay KIBOR plus 3 percent interest payment to customers on late delivery of vehicles for more than 60 days.

The member FTO Majid Quershi in a media briefing informed that FTO has also directed the Engineering Development Board to submit the compliance report in this regard.

It is pertinent to note that a number of taxpayers had filed complaints with the FTO stating that they suffered a lot of mental and financial hardship on account of extra financial burden due to delayed delivery, by M/s Toyota Ravi Motors and M/s PAK Suzuki Motors being responsible for the same.

The background of the recent decision by the FTO is that in two cases Cars were provisionally booked on 08.11.2021 and 16.03.2022 to be delivered within 60-days of provisional booking with an end dates on 08.01.2022 and 17.11.2021, respectively, much before new budgetary measure but was actually delivered on 02.02.2022 and 21.02.2022 much beyond 60 days. 

Meanwhile, he also said that FTO has also ordered FBR to ensure that low paid employees of Pakistan Broadcasting Corporation and other such organizations are not burdened with excessive tax deductions at the withholding stage while taxpayers’ facilitation constitutes the core functions of FBR its implementation on the ground should also be visible.

During the course of the hearing on 07.04.2022, the Departmental Representative pleaded that “The question as to whether a person is an employee under a Master-Servant Relationship, or a service provider is a question of fact that needs to be established in each situation. Hence any such clarification of general nature is likely to be misused and may cause a loss of revenue…”. 

The FTO explained to the Departmental Representative that in order to determine the “Employer-Employee Relationship” for the purpose of taxation under the Income Tax Ordinance, 2001, the basic parameter was the existence of a “Master-Servant Relationship” between the persons. 

 

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