IESCO imposes double taxation on employees, brings low paid employees in tax net

PESHAWAR, Dec 5 (APP): The Islamabad Electricity Supply Company (IESCO)
has imposed double taxation on salaries of its employees by deducting tax twice from their salary; one from the overall salary including allowances and other under the head of house hiring facility, thus bringing the low paid employees in tax net.

The company just through a letter issued by Manager Corporate Accounts IESCO, Islamabad dated August 8, 2016 notified that “the amount paid by the employer of IESCO to the owner acquired house will be included in the taxable salary,” neither consulting Federal Board of Revenue nor Income Tax department, said IESCO employees while talking to this news agency.

They said the Manager Account has set a new precedent while imposing
double taxation on employees as the government rules does not allow tax on hiring a house as the government servants already pay tax from their salary under the head and on the other side the tax is also deducted from the house owner from the rent paid to him.

The IESCO employees questioned that if there was any such provision
under Income Tax Ordinance 2001, 2002 to bring house hiring facility in tax net then why the other government departments were not implementing it.

They said that company has started deducting double taxes from their
salaries from the month of November adding that the employees of BPS-7 has now come in tax net as the IESCO calculates the annual income by adding hour rent in salary despite the fact that their annual income is less and non taxable.

When contacted Office of Finance Director, IESCO, Muhammad Aslam the relevant Official told APP, that office of Manager Corporate Accounts of the company consulted income tax advisors prior to implementing or notifying the letter of taxation on house hiring facility, maintaining that the income tax advisors told them that tax can be deducted on house hiring facility.

When asked whether its comes under double taxation, the official did not give a satisfactory answer and said that income tax advisors guided them and they have started deducting the amount from house hiring facility.

The IESCO employees further said that the company signs 11-month house hiring contract with the owner of house, while the tax is deductable on 12-month income rather on 11-month as per Income Tax rules then how come IESCO is deducting tax from their salaries in the name of house hiring facility when it does not sign 12 month contract with the house owner.

When contacted Income Tax Department, an official of Salary Section told this news agency that double taxation is not allowed on salaries of government employees, adding if government employees are already paying taxes in salaries that include all allowances then deduction of tax from salaries under the head of house hiring facility is irrational.

The IESCO employees requested IESCO BoD, FBR and Finance Ministry to look into the matter as the company has brought hundreds of its employees under tax net.

They further urged that the tax from IESCO officers who were enjoying
official accommodations should also be deducted as per market rent in that area instead of giving them indemnity.

This agency when contacted PESCO, FESCO and WAPDA to confirm whether they are also deducting the tax on house hiring facility, the relevant officials said that there is no such deduction from their employees.