KARACHI: President Arif Alvi has confirmed Federal Tax Ombudsman decision that in MSBS (MONEY SERVICE BUSINESS) and MTO (MONEY TRANSFER OPERATOR) be considered by the FBR as Remittances through Normal Banking.
State Bank Of Pakistan had clarified in 2019 that the foreign remittances received through MSBS/Exchange companies, Foreign Remittances and MTO’S also constituted “Foreign Exchange remitted from outside Pakistan through normal banking”.
In a recent case decided by the President of Pakistan, the complainant a member of an AOP ,e-filed returns of income for tax years 2017 and 2018 under section 114 (1) of the ordinance along with wealth and reconciliation statements by declaring foreign remittance amounting to Rs 1.645 million and Rs 2.290 million respectively . However FBR issued notices to the complainant and kept the case pending for a long period without any plausible reason.
Subsequently, show cause notices were issued under the income tax ordinance proposing the addition of legally sent foreign remittances. The complainant requested Income Tax department to drop the proceedings in view of the state Bank of Pakistan (SBP’s) clarification.
The department, however, disregarding the legal position, facts, and case laws amended the assessments for tax years2017 and 2018 and denied the benefit to the complainant .The complainant therefore took up the matter with the Federal Tax Ombudsman.
Federal Tax Ombudsman directed FBR to issue circular to all the field formations to follow the clarification of the SBP and directed the commissioner –IR, Sialkot Zone to re-visit the order in the case of complainants in terms of section 122 A of the ordinance in the light of clarification issued by the SBP and Order-in-review by the FTO and pass fresh order after affording opportunity of hearing to the complainant. However, instead of complying with the order FBR filed the review with the President of Pakistan.
The President has now affirmed the FTO’s order and held that failure of FBR to follow SBP’S clarification is maladministration. He also decided that MSBS/EXCHANGE companies, MTOS be considered as normal banking for remittances and issued instructions to provide relief to the aggrieved taxpayers.