Federal Tax Ombudsman Clarifies FTO Not Adjudicating Authority in Tax Matters

Federal Tax Ombudsman clarifies FTO not adjudicating authority in tax disputes and cannot determine tax liability, according to a latest official order addressing net metering tax complaints in Pakistan.

The newly appointed Federal Tax Ombudsman made it clear that the office does not have the legal mandate to decide tax amounts or interpret regulatory tariff policies. Instead, its role is limited to addressing maladministration and referring matters to relevant authorities for administrative correction.

The order explained that the complaint involved the tax treatment of electricity bills under the net metering system. This system allows consumers to generate their own electricity and supply excess power back to the national grid. However, different electricity distribution companies have been applying tax rules in varying ways.

The Ombudsman noted that such differences in tax collection practices have created confusion and complaints, particularly among consumers of K-Electric. Some distribution companies were charging taxes differently, while others were not following the same approach.

However, the office found no evidence of deliberate discrimination by the tax authorities. Instead, the issue appeared to result from a lack of clear and uniform implementation of existing tax instructions across the country.

The Ombudsman emphasized that the FTO not adjudicating authority means it cannot override regulatory frameworks set by bodies like the National Electric Power Regulatory Authority (NEPRA) or determine fiscal liabilities. These responsibilities fall under the jurisdiction of the Federal Board of Revenue (FBR).

The order further noted that the FBR had already issued guidance on net metering tax treatment. However, those instructions were not implemented consistently in all regions, which led to ongoing grievances.

To resolve the issue, the Ombudsman recommended that the FBR review the matter at the policy level. The tax authority has been asked to coordinate with relevant stakeholders to ensure clarity and consistency in tax application nationwide.

The FBR has also been directed to properly communicate its instructions to all field offices and ensure that uniform practices are followed. This step is aimed at preventing future confusion and ensuring equal treatment for all net metering consumers.

In addition, the FBR must submit a compliance report to the Ombudsman’s office within 60 days. This report will confirm what actions were taken to implement uniform tax procedures.

The decision highlights the Ombudsman’s limited role and shifts responsibility to the FBR for ensuring consistent tax implementation across Pakistan.