KARACHI: In a recent clarification issued by FBR, The workers welfare fund (WWF) has been segregated from other taxes being collected by FBR.
The subject clarification has been issued while taking to account the observations made by Federal Tax Ombudsman. Previously, while disposing of a complaint the FTO had communicated for the following observations.
I. Record of all refunds of WWF and WWPF need to be separately maintained by IR field formations. While furnishing final MPR for the month of June of each FY, lR field formations must reflect the overall refund amount of WWF, if any, paid by them during the year.
ii. This overall amount of refund of WWF communicated lR field formations must be separately summed up by Secretary Revenue Budget, IR, FSR HQs.
iii. The aforesaid accumulative amount of refunds of a non tax levy/WWF paid from revenue collection need to be adjusted at the time of final yearly adjustment of Federal Accounts.
iv. In a recent decisions this office has already held that any liability of WWF cannot be adjusted against determined tax refund because only inter-tax/intra tax adjustment is covered under the law. FBR’s letter No. 1(10) ST-L&PE/2020/64665-R dated 2nd March, 2022 also holds the same view.
v. Refund order u/s 170(4) of Income Tax Ordinance, 2001 covers only issuance of Tax refunds. Section l70 (1) categorically states; “A taxpayer who has paid tax in excess of the amount which the taxpayer is properly chargeable under this Ordinance may apply to the Commissioner for a refund of the excess.”
Apparently refund of any non tax levy is not covered under the said section. If any such refund is to be issued than the order will have to be passed u/s 4(6) of WWF Ordinance. 1971 it has now been clarified by FBR that WWF is collected by the officers of Inland Revenue from the Industrial Establishments @ 2% whose total income is not less than Five lac Rupees. The mode of payment and recovery from industrial undertaking is mentioned in section 4 of the workers welfare fund before ordinance, 1971. The said amount is paid by the Industrial Establishment on or before the date prescribed for filing of return and proof of payment is furnished to the concerned officer, if the officer does not agree with the working of the industrial establishment, shall pass an order by taking into account the amount paid by before the date specified in the order. similarly, the excess amount shall be refunded by the concerned officer to the Industrial Establishment. The amount of tax and WWF should be bifurcated. WWF that is refundable should be refunded from the WWF account only.