Islamabad: In a significant effort to simplify tax processes for salaried individuals, the Federal Tax Ombudsman (FTO) has proposed changes to the SAP module used by the Accountant General Pakistan Revenues (AGPR). The proposed adjustments aim to streamline tax credits and adjustments, reduce excessive deductions, and eliminate lengthy refund processes.

According to Zameen.Com, the current system subjects salaried individuals to excessive withholding tax deductions under Section 149 of the Income Tax Ordinance, 2001, despite eligibility for tax credits under Clause (2) of Part III of the Second Schedule. The FTO identified outdated procedures at the District Account Offices (DAOs) as the root cause of these issues, which misalign with legislative intent.

To resolve these discrepancies, the FTO has recommended collaboration between the AGPR and the Federal Board of Revenue (FBR) to update the SAP module. This update aims to facilitate automatic tax adjustments and credit allocation, ensuring compliance with legal provisions and providing timely relief to taxpayers.

During a recent meeting chaired by the AGPR, the proposal received initial approval, with an emphasis on further internal discussions. The AGPR requested that the FBR's Inland Revenue (Policy) wing continue correspondence to finalize the adjustments.

Additionally, the FTO has urged the FBR to establish a monitoring mechanism to prevent system misuse at the withholding stage. These reforms are expected to provide smoother tax credit processes for salaried individuals and pensioners, reducing their dependency on refund claims under Section 170 of the Income Tax Ordinance.

Once implemented, these changes are anticipated to align tax deduction processes with legislative intent, offering significant relief to Pakistan's salaried class.