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June 24, 2026
The Federal Board of Revenue (FBR) has issued a recovery notice to Pakistan International Airlines (PIA) for failing to deposit Rs2.217 billion in salary withholding tax
The Federal Board of Revenue (FBR) has issued a recovery notice to Pakistan International Airlines (PIA) after the national carrier allegedly failed to deposit Rs2.217 billion in salary withholding tax deducted from employees. According to Profit Pakistan Today, the Regional Tax Office-II directed PIA’s finance department to immediately deposit the withheld tax collected under Section 149 of the Income Tax Ordinance, 2001.
The liability has been accumulating since July 2025, in violation of Rule 43 of the Income Tax Rules, 2002, which requires timely deposit of salary withholding tax deducted at source. Sources revealed that PIA deducted Rs294.9 million in July 2025, Rs293.41 million in August, Rs297.19 million in September, Rs297.097 million in October, Rs317.348 million in November, Rs351.019 million in December, and Rs366.512 million in January 2026. Despite these deductions, the airline did not deposit the amounts into the government treasury, bringing the total recoverable sum to Rs2.217 billion.
Under Section 149, employers must deduct tax at the time of salary payment, while Section 160 requires the deducted amount to be paid to the Commissioner within the prescribed time. PIA’s failure has triggered proceedings under Sections 161, 182, and 205, which deal with penalties for non-compliance.
The notice also covers February to June 2026, where deposits remain unverified or require reconciliation before the close of the financial year. The issue has direct implications for PIA employees, as FBR has separately warned them that if the deducted tax is not deposited, they will not be able to claim it in their Tax Year 2026 returns. Employees risk exclusion from the Active Taxpayers List, effectively being treated as non-filers despite monthly deductions.
To resolve the matter, RTO-II has asked employees to submit copies of salary slips showing gross salary, taxable salary, and tax deducted within seven days. FBR cautioned that non-deposit or non-verification could cause mismatches in taxpayer records, delay tax credits and refunds, and lead to litigation.
PIA has yet to respond to the notice. The case underscores the importance of compliance with tax laws and raises concerns about accountability within state-owned enterprises.
