Discriminatory Treatment in denying the Tax Rebate to School’s Principals in different areas comes within the Ambit of Maladministration --- Federal Tax Ombudsman
Islamabad 07-09-2024: In a significant ruling, the Federal Tax Ombudsman (FTO) has directed the Federal Board of Revenue (FBR) to grant a 25% tax rebate to Senior Headmasters, Principals, and other school heads who also perform teaching duties, marking an important win in the fight against tax discrimination.
The decision comes in response to complaints filed by several Senior Headmasters and Principals from Gujranwala, who argued that despite being categorized in the teaching cadre, they were denied the tax rebate provided to full-time teachers and researchers under Clause (2), Part-III of the Second Schedule to the Income Tax Ordinance, 2001.
According to the facts of the case, the complainants argued that their promotion to administrative roles, such as Senior Headmasters, resulted in the denial of the 25% tax rebate despite still engaging in classroom teaching. They highlighted that similar rebates were already being granted to Principals, Headmasters, and Headmistresses of FG Schools and Khyber Pakhtunkhwa (KPK), which they viewed as discriminatory.
In response, the Revenue Division contended that the tax rebate was only applicable to full-time teachers and researchers, as defined in the Income Tax Ordinance, 2001. They argued that those holding managerial positions, such as Principals and Headmasters, did not qualify for this rebate. However, the complainants emphasized that their duties included both teaching and administrative responsibilities, making them eligible for the rebate.
The complainants also pointed to earlier rulings by the FTO in 2022, which had been upheld by the President of Pakistan in January 2023, confirming that similar cases involving Headmasters in KPK Schools had been decided in their favor. The FTO agreed with the complainants and found compelling evidence of discriminatory treatment in denying the rebate to Principals in Gujranwala, while their counterparts in FG Schools and KPK were granted the same benefit.
The FTO also dismissed the department’s argument that Headmasters and Principals did not qualify as full-time teachers, stating that the job descriptions for these roles required them to engage in classroom teaching along with their managerial duties.
The Ombudsman ruled that the denial of the tax rebate to the complainants amounted to maladministration under Section 2(3)(i)(b) of the Federal Tax Ombudsman Ordinance, 2000. The FTO recommended that the FBR direct its Chief Commissioner in Gujranwala to ensure that Senior Headmasters, Principals, and other eligible school heads are treated on par with those in FG Institutions and KPK Schools in matters of tax withholding under Section 149 of the Income Tax Ordinance, 2001.
The FBR was ordered to comply with these directions and submit a report to the FTO Secretariat within 45 days.
This ruling could have far-reaching implications, ensuring equitable treatment of teaching professionals across the country. It establishes a precedent for recognizing the dual role of teaching and administrative responsibilities for school heads and their eligibility for tax benefits.
The decision reaffirms the principle that tax laws must be applied uniformly and without discrimination across different regions and categories of employees.
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