The Federal Tax Ombudsman (FTO) has ruled that government school teachers should not be subjected to withholding tax under Section 153 (1) (b) of the Income Tax Ordinance for payments received for supervision, invigilation, and paper marking during board examinations.
The decision directs the Federal Board of Revenue (FBR) to classify these earnings as salary under Section 149 and submit a compliance report within 60 days.
The ruling follows complaints from teachers affiliated with the Board of Intermediate and Secondary Education (BISE) Gujranwala, who argued that payments for examination duties were wrongly taxed as services instead of being treated as part of their salaries.
The teachers, employed by the Punjab Education Department, contended that invigilation and marking were mandatory responsibilities assigned by the administration, with no option to negotiate compensation. They emphasized that since these tasks were extensions of their teaching duties, they should be taxed accordingly under the salary provisions of the ordinance.
Following a review, the FTO determined that examination-related tasks were integral to the education system and should not be considered independent services.
The decision noted that many affected teachers fall below the taxable income threshold but were still subjected to withholding tax deductions. The ruling reinforces the FTO’s role in ensuring fair taxation policies and provides financial relief to teachers performing examination duties.
