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School Heads in Punjab are entitled to a 25% Tax Rebate, aligning them with Similar Roles in Khyber Pakhtunkhwa (KPK) and Federal Institutions --- Federal Tax Ombudsman

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School Heads in Punjab are entitled to a 25% Tax Rebate, aligning them with Similar Roles in Khyber Pakhtunkhwa (KPK) and Federal Institutions --- Federal Tax Ombudsman

Islamabad 08-11-2024: In a recent ruling, the Federal Tax Ombudsman (FTO) has ordered the Federal Board of Revenue (FBR) to extend a 25% tax rebate to headmasters, principals, and other senior teaching administrators in Punjab, aligning them with their counterparts in Khyber Pakhtunkhwa (KPK) and federal government (FG) institutions. The decision addresses a long-standing grievance over discriminatory tax practices across regions, as Punjab school heads had been denied tax benefits available to similar positions elsewhere.

The complaint, lodged under Section 10(1) of the Federal Tax Ombudsman (FTO) Ordinance, 2000, was brought forth by a group of headmasters and principals from Punjab. They argued that despite performing both administrative and teaching duties, they were deprived of the 25% tax rebate provided under Clause (2), Part-III of the Second Schedule to the Income Tax Ordinance, 2001. This benefit has been traditionally extended to full-time teachers and researchers. The complainants emphasized that their peers in KPK and FG institutions receive the rebate, thus creating a disparity in tax treatment.

The FBR initially resisted the complaint, asserting that the complainants’ managerial roles disqualified them from being considered “full-time teachers” under the Income Tax Ordinance. However, the Federal Tax Ombudsman (FTO), after hearing the arguments, disagreed, citing that the job descriptions of these individuals indeed include teaching responsibilities. This dual role, according to the Federal Tax Ombudsman (FTO), places them within the teaching cadre, making them eligible for the rebate.

The Federal Tax Ombudsman (FTO) determined that the FBR’s refusal to grant the tax rebate to Punjab school heads, while offering it to those in KPK and FG institutions, constituted discriminatory treatment. The judgment also referenced past decisions, including identical complaints from KPK, where the rebate was affirmed by both the Federal Tax Ombudsman (FTO) and the President of Pakistan. The Federal Tax Ombudsman (FTO) labeled this disparity as “maladministration” under Section 2(3)(i)(b) of the Federal Tax Ombudsman (FTO) Ordinance, 2000.

In its findings, the Federal Tax Ombudsman (FTO) highlighted the binding nature of previous decisions, noting that the President of Pakistan had already upheld rulings favoring the tax rebate for KPK school heads in similar positions. This judgment sets a precedent that mandates uniform treatment across all provinces, ensuring the FBR cannot selectively apply tax benefits.

The Federal Tax Ombudsman (FTO) has directed the FBR to apply Section 149 of the Income Tax Ordinance, 2001 consistently across regions. Specifically, it ordered the FBR to instruct its Sialkot regional office to provide the 25% tax rebate to Punjab school heads, aligning them with their peers in FG and KPK institutions. The FBR has been given a 45-day window to ensure compliance with these recommendations and report back on its implementation.