The profile of such persons available with the Nadra would be used by FBR for broadening the tax base particularly registration of potential businessmen/industrialists. These businessmen could be questioned about their registration and business activities for proper documentation and tax compliance.
Under the FBR's broadening of tax base exercise, sources said that notices requiring filing of returns have been issued to 154,874 potential taxpayers so far. In response to these notices 31,901 persons have filed returns. Provisional assessments in cases where the persons did not respond to the notices have been framed in more than 35,879 cases.
Besides, FBR assigned target to Regional Tax Offices about 207,000 notices to be issued under section 114 for filing of Income Tax Returns during FY 2014-15. So far 54,789 notices have been issued by the RTOs against the said target.
Furthermore, all RTOs have been directed by the FBR to maintain computerised stock registers for potential taxpayers (both filers & non-filers). Sources said that the FBR has taken a number of initiatives for broadening direct/indirect base. The measures so taken are yielding both short and long term results. The thrust of the various administrative and policy initiatives already taken or intended to be taken in the coming budget is to place more reliance on direct taxes in comparison to indirect taxes. It has long been recognised that non-reporting and under-reporting of income is a matter of grave concern. Such persons do not contribute to state revenue despite the fact that they can afford to and are liable to pay due taxes. On the other hand they demand services of the state.
In view of importance of the matter, a fresh initiative to expand the tax base has been launched by the government in FY 2013-14. This exercise makes use of data quantifiable economic activities of significant value that are indicative of significant asset creation or consumption expenditure by persons not on tax roll.
For the purpose, a National Data Warehouse has been created in the FBR. The data warehouse primarily includes the data collected through third party sources such as motor vehicle registering authorities, educational institutions, CVT collected by FBR and provincial governments on purchase of immovable property, electricity distribution companies, automobile manufacturing Cos and the withholding tax statements. Based on this data base notices are being issued.
Sources said that the new policy measures taken through Finance Act, 2014 to broaden the tax base include a new regime wherein different rates of adjustable withholding of Income Tax for income tax returns filers and non-filers on certain transactions have been introduced. This includes sale and purchase of immovable property, purchase, registration and transfer of ownership of motor vehicle, cash withdrawal from banks, and payment of profit on debt and dividend income. The higher rates of tax for non filers will not only dig non-filers to file returns and declare their income from all sources, but also provide a database to FBR for identification of potential taxpayers to be pursued for broadening of tax base.
In the Finance Act, 2014 Special Procedure has been adopted wherein sales tax is charged from unregistered retailers through their monthly electricity bills at the rate of 5% where monthly bill does not exceed Rs 20,000 and seven and half percent where the bill exceeds the aforesaid amount. Big retailers working in air-conditioned shopping malls or who have a credit or debit cards machine or whose cumulative electricity bill of preceding twelve consecutive months exceeds Rs 600,000 or who have a shop in a air-conditioned shopping mall or who are part of a chain are registered to pay sales tax at standard rate, they added.