Manual exemption certificates: LTUs/RTOs chiefs barred from issuance

SOHAIL SARFRAZ

ISLAMABAD: The Federal Board of Revenue (FBR) has barred all Chief Commissioners of Large Taxpayer Units (LTUs) and Regional Tax Offices (RTOs) from issuance manual exemption certificates under section 153 of the Income Tax Ordinance 2001.

Sources told Business Recorder here on Tuesday that the decision had been taken in the Chief Commissioners' Conference held at the FBR House under the chairmanship of the FBR Chairman Salman Siddique.

The FBR has decided that the exemption certificates under section 153 of the Income Tax Ordinance 2001 will no more be issued manually and will now be system-based and available on the FBR Web Portal. Any certificate not available on the FBR Web Portal would be considered invalid. This would facilitate withholding agents to cross-verify the authenticity of the exemption certificates issued by the concerned commissioners. The exemption certificates issued to service providers and manufacturers-cum suppliers of goods would be issued through computer system of the FBR.

According to sources, at present, exemption certificates issued at the import stage have been issued through the computer system. The system-based exemption certificates could be easily verified by the customs authorities at the import stage. The data of the same are also available on the FBR Web Portal. On the similar pattern, the tax department would issue system-based exemption certificates under section 153 of the Income Tax Ordinance 2001. The same would be available on the FBR Web Portal for cross verification purposes. During the Chief Commissioners' Conference, it was brought to the notice of the tax authorities that there are chances of misuse of the manually issued exemption certificates. In one case, an exemption certificate was issued, but the details of the said certificate were not available in the relevant file. To avoid such incidences in future, the FBR has directed all Chief Commissioners of LTUs and RTOs to only issue system-based exemption certificates under section 153 of the Ordinance 2001.

Sources said that so far the FBR has received one lakh and 60,000 income tax returns including returns filed by the corporate sector. The FBR has directed the field formations to ensure data entry of all manually filed income tax returns to maintain an electronic database.

It has been informed that the FBR is expecting to collect nearly Rs 10 billion from recent withholding tax audit by December 2011. During last two months, the field formations have managed to raise income tax demand to the tune of Rs 8 billion which would be further increased in coming days. This fresh demand of Rs 8 billion has been raised through latest withholding tax audit carried out by the field formations. The FBR has directed the Chief Commissioners of LTUs/RTOs that the withholding tax audit would remain top priority and the FBR's Operational Strategy on the withholding taxes must be enforced at the level of the field formations.

Sources said that the tax authorities have categorically conveyed to the field formations that integrity would be given top priority and any official involved in maladministration etc would not be tolerated. The FBR will take prompt action against any official who would be involved in such malpractices.

The FBR has further directed the Chief Commissioners of LTUs/RTOs to approach different government organisations and autonomous bodies to enforce employers' statements by them. For example, the tax department would check the employer's statements filed by Pakistan Railways, SBP, PIA, Accountant General of Pakistan and other government organisations, semi-government organisations and autonomous departments etc. The employers' statements would help the tax department to obtain necessary data for incorporating the same in the electronic system of the FBR.

About payment of sales tax refunds, sources said that the FBR will issue 50 percent of the sales tax refunds up to Rs 100,000 by December 31, 2011 and the remaining amount would be refunded by January 31, 2011. The FBR has directed the field formations to strictly follow the deadlines for speedy payments of sales tax refunds.

Meanwhile, the FBR has further directed the Chief Commissioners of LTUs/RTOs to personally pursue recovery of arrears. In this regard, the tax officials should vigorously pursue such cases at the level of the judicial fora.

In case of illegal input tax adjustments, the FBR directed the field formations to strictly control inadmissible refunds/adjustments and effectively use the FBR's Policy Document on checking illegal sales tax refunds. The recovery of illegal sales tax adjustments should be give top priority of the FBR to improve sales tax collection.  The conference also reviewed progress on revenue collection of each RTO and LTU and directed the field formations to take all possible steps to meet the revenue collection target for 2011-12, sources added.