Tax Talks

ISLAMABAD: The Federal Tax Ombudsman (FTO) has directed the Federal Board of Revenue (FBR) to ensure all salary payments made to the teachers and schools staff performing supervisory and invigilation duties and paper marking are not subjected to withholding tax under Section 153 (Services rendered) of the Income Tax Ordinance 2001.

According to an order issued by the FTO on Monday, the complainants are government school teachers, who in addition to their regular teaching assignments, are doing supervision and invigilation work, holding of examinations and marking of papers for the Board of Intermediate & Secondary Education (BISE) Gujranwala. Currently the payments received by them from the Board are being subjected to withholding tax u/s 153(1)(b)(Services rendered), instead of head salary, under Section 149 of the Income Tax Ordinance, 2001 (the Ordinance).

The FTO order declared that the remuneration, fees/ wages paid by the Boards of Intermediate & Secondary Education to the supervisory and invigilation staff and paper markers, under an arrangement with their employers, fully falls under the head salary; therefore it warrants withholding tax u/s 149 instead of Section 153(i)(b) of Income Tax Ordinance, 2001. Discriminatory withholding under Section 153(1)(b) in such cases is an act of maladministration in terms of Section 2(3) (i)(a)(b)© and (ii) of FTO Ordinance, 2000.

The FBR is directed to ensure that the RTO Gujranwala, in coordination with Board of Intermediate & Secondary Education, Gujranwala reviews its current withholding regime in the cases of complainants, so that all payments made to the teachers and schools staff performing supervisory & invigilation duties and paper marking are subjected to tax withholding u/s 149, FTO’s directions added.

The FTO order stated that supervision & invigilation, holding of examinations and marking of papers, all these processes constitute an integral part of any education system. It is an admitted fact that the said services mainly aim at conducting the processes of evaluation and grading of students. Similarly, this evaluation is solely based upon the curriculum& course material taught by the same teachers; therefore, it is part and parcel of education system and an extension of teaching assignment. These services are provided by the teachers during their duty hours and with the full consent and under directions of their employer; i.e., provincial education department.

All schools & colleges are obligated to share the lists of their respective teachers & staff, available for the aforesaid assignments and any refusal is construed as non-compliance of office duties. Teachers performing the above services cannot negotiate the rates of remuneration and are paid the amounts as fixed by the BOGs of Education Boards. It is pertinent to mention here that secretary Schools and Colleges are ex-officio members of said BOGs. The amounts paid in the above connection are quite nominal because all teachers and staff members are rotated during the year Moreover, in the cases of primary schoolteachers and lower invigilation staff normally salaries fall below the tax limit; however, they are heavily subjected to Section 153(i)(b) for their invigilation duties, the FTO order added.

Source: Business Recorder, 2025