PR No. 185 President orders FBR to refund deducted tax to British era library in Multan as a hardship case Islamabad: January 29, 2023

President Dr Arif Alvi has upheld the orders of the Federal Tax Ombudsman (FTO) to issue tax exemption certificate for the tax year 2021 to a British era library in Multan, in addition to returning the deducted tax of Rs. 198,000 to meet its essential expenses. While rejecting FBR’s representation against the decision of FTO, the President noted that it was manifestly a hardship case, that Public Library and City Reading Room, Multan (the complainant) was registered as a Non-Profit Organization, and the late filing of returns withholding statement had not caused any loss to the national exchequer, therefore, FBR should take a sympathetic and considerate view of the matter. FBR had filed a representation with the President against the decision of FTO directing it to provide relief to the public library. In his decision, the President observed that the complainant was providing readership facility to the citizens of the area at nominal cost of Rs. 20/- as membership fee per month, that it had approximately 400 members at present, and that a small number of staff was running the library and none of them drew taxable salary. He further noted that the running cost of the library was met through donations and the profit on fixed deposit of its endowment. The President noted that the tax Exemption Certificate could not be issued to the complainant due to non-filing of return for the Tax Year 2020-21 and the delay in issuance was attributed to non-filing of the return. He further observed that consequent to non-availability of the Exemption Certificate, tax amounting to Rs. 0.198 million was deducted on the deposits being maintained with the Bank which was a primary source of its survival, and due to non-issuance of Exemption Certificate, even its four employees had been deprived of their small salaries i.e., less than Rs.20,000/- of each. The President observed that Since the FBR had already issued an Exemption Certificate for the later six months of the tax year in question, thus, the Department was required to issue Exemption Certificate for the earlier six months of the financial and also in future take a sympathetic and considerate view of the matter. In such circumstances of the case, the FBR may issue Exemption Certificate to the Library for the remaining period and refund its deducted amount enabling it to meet its most essential expenses, held the President.