FBR proposes amendments to Income Tax rules with up to Rs500,000 compensation

The Federal Board of Revenue (FBR) has proposed further amendments to the Income Tax Rules 2002 introducing changes to the mechanism for resolving tax disputes through alternative dispute resolution.

ISLAMABAD: The Federal Board of Revenue (FBR) has proposed further amendments to the Income Tax Rules 2002 introducing changes to the mechanism for resolving tax disputes through alternative dispute resolution.

Under the draft amendments, taxpayers seeking an alternative solution to a tax dispute will be required to submit an application to the FBR on the prescribed form. The application will also have to include details of the taxpayer’s nominated representative as well as the names of three retired judges proposed for the alternative dispute resolution process.

The proposed rules outline different compensation levels for the chairperson and members of the dispute resolution committee depending on the amount of tax under dispute.

For tax disputes involving an amount of up to Rs50 million the draft proposes a compensation of Rs300,000 for the chairperson and Rs150,000 for each committee member.

For disputes involving more than Rs50 million, the proposed compensation would increase to Rs500,000 for the chairperson and Rs250,000 for each member.

The draft also proposes that the chairperson and committee members should receive travelling and daily allowances equivalent to those provided to officers in Basic Pay Scale (BPS) 22 and BPS 21.

Under the proposed amendments multiple cases involving similar issues may be combined and processed jointly. This provision is aimed at facilitating the handling of cases with common or substantially similar tax-related matters.

The draft further states that if a dispute resolution committee is dissolved any amount already deposited or paid would be returned within 15 days.

The proposed rules also include provisions relating to conflicts of interest. If a committee member or chairperson faces a conflict of interest, they would be required to inform the FBR within seven days.

Once compensation has been issued or paid, the chairperson or committee member would not be allowed to withdraw from the proceedings before the final decision is reached.

The FBR has invited stakeholders and the public to submit their objections and suggestions regarding the proposed amendments. Comments can be submitted within seven days of the publication of the draft.

The proposed changes are intended to strengthen the alternative dispute resolution mechanism and provide a clearer framework for handling tax disputes. If approved the amendments would introduce revised procedures compensation structures and accountability requirements for members of tax dispute resolution committees.