FBR to set up DGI&I for IRS to probe direct taxes frauds: bill may be moved in parliament

The Federal Board of Revenue (FBR) is expected to move a Bill in the Parliament to set up a 'Directorate-General of Intelligence and Investigation' for Inland Revenue Services (IRS) to investigate frauds in direct taxes, including income tax and withholding tax regimes.
Sources told Business Recorder here on Saturday that the FBR has to amend the Income Tax Ordinance 2001 for creation of an intelligence agency for investigating cases of income tax related matters. To obtain legal backing, a Bill would be moved in the Parliament to create a new directorate.
The new agency would have a separate network of experienced officials of IR in the field formations to exclusively examine the cases of tax frauds on the direct taxes side. In every Regional Tax Office (RTO), the officials of the agency would be deputed to examine income tax and withholding tax cases to unearth fraudulent activities, if any.
The issue of creation of a separate agency for investigating the income tax fraud cases was discussed in the last Board-in-Council meeting. Shahid Hussain Asad, Director General (Broadening of Tax Base), made a presentation apprising the Board on the vitality, viability and proposed structure of his Directorate General. He also proposed the change of its nomenclature from Directorate General (Broadening of Tax Base) to Directorate General (Intelligence & Investigation Inland Revenue). During the meeting, threadbare discussion was made and it was decided that a committee be set up comprising Additional Secretary, Revenue Division; FBR Member Inland Revenue, FBR Member Facilitation and Taxpayer Education (FATE) and DG (Broadening of Tax Base).
According to sources, tax authorities have in principle agreed to create a separate 'Directorate-General of Intelligence and Investigation' for Inland Revenue Services (IRS) covering income tax, sales tax and FED. The powers are already available to the sales tax officials to investigate tax frauds as intelligence officers under the Sales Tax Act 1990 and Federal Excise Act. However, there is a need to introduce a provision in the income tax law for creation of a separate intelligence agency. Presently, the FBR is examining different options for creation of the agency for Inland Revenue. An enactment in the law is needed for which the FBR may move a Bill to the Parliament.
There is a need for setting up separate DG Intelligence for exclusively dealing with the issues of domestic taxes covering income tax, sales tax and federal excise duty. However, the Pakistan Customs Service should continue to have the DG Intelligence to deal with customs duty related issues. In this way, the agency would be more focused on customs related issues particularly enforcement duties/preventive operations to curb smuggling including narcotics. Sources said that the creation of a separate DG Intelligence is necessary after creation of the IRS under the new organisational setup. The proposal may not enhance the powers of the income tax officials but will set up an exclusive intelligence setup to check tax frauds/evasion in sales tax, income tax and excise regime.