AGPR to revamp tax adjustment system for salaried individuals, pensioners

The Accountant General Pakistan Revenues (AGPR) has agreed to update its Systems, Applications, and Products (SAP) module following recommendations by the Federal Tax Ombudsman (FTO) to simplify tax adjustments and credits for salaried individuals and pensioners. 

According to a news report, the initiative is aimed at eliminating the lengthy tax refund process and ensuring compliance with tax laws.

Under the agreement between the AGPR and the Federal Board of Revenue (FBR), tax adjustments will be processed up to the AGPR’s tax liability limit. During a meeting chaired by the AGPR, it was decided that the proposal will be reviewed in an internal meeting scheduled for this month. The FBR has been asked to provide specific details of the tax sections applicable for adjustments.

The move follows complaints from salaried individuals subjected to excessive tax deductions under Section 149 of the Income Tax Ordinance, 2001. Despite qualifying for tax credits under Clause (2) of Part III of the Second Schedule, complainants reported that district account offices (DAOs) failed to allow these credits, resulting in undue financial burden.

An investigation by the FTO revealed that the current withholding tax deduction procedures at DAOs are inconsistent with legislative intent. The FTO highlighted that these practices fail to adhere to Section 149’s provisions, which mandate crediting withheld taxes under other heads during the current period. 

To address these issues, the FTO recommended overhauling the SAP module to enable tax credit adjustments, establish a robust monitoring mechanism to prevent misuse at the withholding stage, and ensure compliance with the law. The AGPR’s implementation of these recommendations will require policy-level discussions and further coordination with the FBR’s Inland Revenue Policy wing.

Additionally, the FTO advised that both AGPR and the Punjab Accountant General update their systems to facilitate prompt tax credit adjustments for eligible taxpayers. This step aims to bypass the cumbersome refund process stipulated in Section 170 of the Income Tax Ordinance and provide timely financial relief to affected individuals.