The Federal Board of Revenue has decided to conduct withholding tax audit of all provincial excise and taxation departments to check deduction of withholding tax on 'goods transport vehicles' under the relevant provisions of the Income Tax Ordinance, 2001. The FBR here on Friday issued instructions to the Chief Commissioners of the RTOs for audit of the excise and taxation departments in this regard.

According to the FBR's instructions, rate of collection under section 234 of the Income Tax Ordinance, 2001 in respect of goods transport vehicles has been increased from Rs 1 per kg of the laden weight to Rs 5 per kg of the laden weight through Finance Act, 2012. The initial reports from various Regional Tax Offices (RTOs) revealed that deduction as per increased rate (from Rs 1 per kg to Rs 5 per kg) is not being applied, which is resulting in shortfall of the deductions under section 234 as reported by the RTOs.

In the light of above-mentioned facts, the FBR has directed the RTOs to constitute a team to conduct a withholding audit of the Excise and Taxation Department. The audit team should ensure that there are correct deductions by the Excise and Taxation authorities as per increased rate and collection of the shortfall on this score, if any, be pointed out on priority. The FBR has also directed the concerned field formations to submit progress report on the issue by end of December, 2012. Under section 234(5) of the Income Tax Ordinance 2001, where tax is collected from any person being the owner of goods transport vehicle, the tax so collected shall be the final tax on the income of such person plying or hiring out such vehicle.

Copyright Business Recorder, 2012