Remuneration Paid to Government School Teachers for Examination-Related Duties must be treated as ‘Salary’ rather than ‘Services Rendered’ for the purpose of Tax Withholding --- Federal Tax Ombudsman (FTO) 

Islamabad 11-03-2025: In a landmark decision, the Federal Tax Ombudsman (FTO), Dr. Asif Mahmood Jah Hon’ble Federal Tax Ombudsman (FTO) has ruled that remuneration paid to government school teachers for examination-related duties, including supervision, invigilation, and paper marking, must be treated as ‘Salary’ rather than ‘services rendered’ for the purpose of tax withholding.

This ruling came in response to multiple complaints filed by government school teachers from Gujranwala who challenged the practice of the Board of Intermediate & Secondary Education (BISE), Gujranwala, of deducting withholding tax under Section 153(1)(b) (services rendered) instead of the appropriate head ‘Salary’ under Section 149 of the Income Tax Ordinance, 2001.

The Ombudsman observed that these duties constitute integral parts of the education system, performed during official working hours under directives from their primary employer the Punjab Education Department. Additionally, teachers lacked any negotiation power regarding remuneration rates, and refusal to undertake these duties was treated as non-compliance with official responsibilities.

The judgment identified such incorrect withholding as discriminatory and an act of maladministration as per Section 2(3)(i)(a)(b)(c) and (ii) of the Federal Tax Ombudsman Ordinance, 2000. Consequently, the Federal Tax Ombudsman (FTO) directed the Federal Board of Revenue (FBR) and the Regional Tax Office (RTO), Gujranwala, to ensure compliance by correcting withholding practices and deducting taxes under Section 149, applicable to ‘Salary’.

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