FBR’s tax notices to salaried individuals spark controversy over legality and fairness

The Federal Board of Revenue’s (FBR) field offices have come under scrutiny for issuing tax recovery notices to salaried individuals, allegedly to meet revenue targets, according to media reports. 

Tax experts have termed these notices unlawful, arguing that they unfairly burden taxpayers whose salaries are already subject to monthly tax deductions by employers.

Reports suggest that Large Taxpayer Offices (LTOs) and Regional Tax Offices (RTOs) are under immense pressure from the FBR to meet their assigned monthly collection targets. As a result, field formations have begun sending show-cause notices under Section 162 of the Income Tax Ordinance, 2001, citing excess tax deductions under Section 149. These notices demand that salaried individuals produce payment receipts (CPRs) deposited by their employers.

In one case, the tax department in Karachi issued an electronic notice on January 28, requiring compliance by January 31—allowing just two days for response. 

Tax experts say such demands are unreasonable, as employees rely on annual tax deduction certificates issued by their employers and cannot be expected to produce CPRs from banks.

Another tax consultant noted that, legally, if an employer makes an incorrect or incomplete tax deduction under Section 149, the FBR should initiate recovery proceedings against the employer under Section 161—not against the employee. 

However, the FBR has bypassed this legal framework and started issuing notices directly to employees, contrary to tax regulations.