1. FACTS

Further to KQU 3335, being and important matter, we would inform you about ------------------------(Attachment 3319.1) ensuing paragraph, with emphasis ours in bold & Underline for quick reading in the Details part.

2. INFORMAL RESOLUTION OF DISPUTES (SECTION-33)

This order caters to extend relief in tax deduction in terms of Section 153(1)(b) of the ITO, 2001 (the Ordinance) of low paid employees allowed on the strength of decisions in  ----------------------------------- which have been upheld by the Hon'ble President of Islamic Republic of Pakistan vide orders dated ----------- on identical issue.

2. The alleged Departmental practice to subject the remuneration of low paid adios/temporary employees has been examined in these orders in the light of relevant legal provisions i.e. Sections 12 and 149 of the Ordinance as under:

Section 12. Salary- (2) Salary means any amount received by an employee from any employment, whether of a revenue or capital nature, including-

(a) any pay, wages or other remuneration provided to an employee, including leave pay, payment in lieu of leave, overtime payment, bonus, commission, fees, gratuity or work condition supplements (such as for unpleasant or dangerous working conditions).

Section 149. Salary. (1) Every [person responsible for] paying salary to an employee shall, at the time of payment, deduct tax from the amount paid at the employee's average rate of tax computed at the rates specified in Division I of Part I of the First Schedule on the estimated income of the employee chargeable under the head "Salary".

3. The above Legal provisions govern "Salary Taxation" Section 12 and withholding of tax thereupon under Section 149 of Ordinance only the equation of employer-employee based on "Master-Servant Relationship" is material. This criterion forms the basic parameter for any employment: Regular/Adhoc/Temporary/ Hired /Daily Wages which are different shades & forms of employment and law doesn't create any distinction among all the above forms.

4. These decisions attracted attention of identical stakeholders and some of the employees engaged in teaching on part time basis as --------------- in ------------ approached this office and claimed that they are also entitled to benefit from these decisions because they meet the criteria of being low paid employees working with any organization and are being subjected to monetary hardship through deductions @ 10-20% at source in terms of Section 153(1)(b). It is an anomaly that regular employees earning salary up to Rs ------------ per annum pay no tax whereas they are taxed heavily.

5. In order to examine the bonafides’ of their claim, the ----------------------------- was asked to provide a list of adhoc/temporary ------- engaged in -----------------. He has responded by providing a list of ------ along with their annual receipts and tax deducted thereon during tax year --------. Proceeding further, a 'Questionnaire' was circulated to these employees in order to ensure their eligibility for the said benefit on the same analogy. 

6 to 7 ----------------------

II.   RECOMMENDATIONS

It is recommended that:

(i) The CCIR, RTO, Multan is directed to ensure that tax shall be deducted on these low paid employees working on temporary/adhoc u/s 149, as has been ordained by the Hon'ble President of Islamic Republic of Pakistan vide orders dated 15.8.22 in similar cases of teaching community;

(ii) The Treasure University of Education Lahore (Multan Campus) Multan to ensure that from now onwards tax withholding on the payments made to these temporary/visiting faculty teachers are subjected to section 149 of the Ordinance in future; and

(iii) Report compliance within 45 days.

IV.   FURTHER DETAILS

Should you require any clarification or explanations in respect of the above or otherwise, or require Income Tax, Federal & Provincial Sales Tax or Withholding Tax Advisory, Statement or Return Filing or Review services, or related accounting matters like the above, please feel free to email Mr Amsal at amsal@kasbati.co with CC to info.kasbati@professional-excellence.com. Your Goodself may continue to get other services from your current Tax & Legal Advisors.

Best regards for Here & Hereafter

Asif S Kasbati (FCA, FCMA & LLB)

Managing Partner 

Kasbati & Co (1400+ Tax, Levies, Companies, Economy, Inflation, HR, Banking, Finance, etc

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