FBR decides to convene Chief Commissioners’ conference

RECORDER REPORT

ISLAMABAD: The Federal Board of Revenue (FBR) has decided to convene Chief Commissioners’ conference in second week of January 2013 to review revenue collection position during first half of 2012-2013 and measures to overcome revenue shortfall during July-November (2012-13).

Sources told Business Recorder here on Friday that the conference would be attended by all Chief Commissioners of Large Taxpayer Units (LTUs) and Regional Tax Offices (RTOs). All Chief Commissioners would submit their progress on the revenue collection and suggest measures to improve revenue collection in the second half of 2012-13. The FBR would also review impact of budgetary measures taken in 2012-213 and actual collection from budgetary measures vis-à-vis assigned targets.

The Chief Commissioners would also present the action plan for improving revenue collection during remaining months of current fiscal year. Besides, the FBR will also take input of Chief Commissioners for increasing withholding tax collection during 2012-13.

According to sources, the FBR will explore new avenues for plugging loopholes in withholding tax regime during next Chief Commissioners’ conference.

When contacted, a tax expert opined that there is a huge gap of approximately Rs 120 billion between the potential of withholding tax and actual collection, pointing towards immediate measures to improve withholding tax regime. In the past, the FBR had estimated revenue leakage of withholding tax to the tune of roughly Rs 120 billion which could be checked through enforcement of withholding tax provisions in potential areas. The estimated potential of Rs 120 billion has been worked out by the Directorate General of Withholding Taxes on the basis of long-term plan to improve withholding tax regime.

According to sources, some of the measures would definitely be helpful in reducing this huge gap included imposition of penalty for failure to file withholding tax statement under section 182 of the Income Tax Ordinance 2001. Along with the enforcement of section 165 of the Ordinance  for filing of statements, the proper monitoring of returns/statements filed under section 182 would play a major role in improving withholding tax collection. Any person who fails to furnish any statement required under section 165 shall be liable to a penalty of Rs 2000.

The FBR should initiate default proceedings against the concerned persons under section 161 of the Ordinance 2001. Where a person fails to collect tax or deduct tax from a payment, the person shall be personally liable to pay the amount of tax to the Commissioner. Similarly, the FBR should impose additional tax under section 205 of the Ordinance 2001 for collection of additional tax from persons who fails to collect tax, or deduct tax. The recovery proceedings under sections 161 and 206 would also be instrumental in generating additional revenue. Besides, potential areas including salary, electricity, telephone, stock exchanges, dividends, profit on debt and other important sectors are needed to be focused upon for improvement in withholding tax collection, tax expert added.