ISLAMABAD: Chairman FBR Salman Siddiqui said on Thursday that the Federal Board of Revenue (FBR) has approved a short-term contingency plan and enforcement measures with imposition of 17 percent standard rate of sales tax on sugar to generate additional revenue and recover admissible taxes by the end of current fiscal (2010-2011).
On the conclusion of Chief Commissioners Conference of Inland Revenue Service at Planning Commission, Chairman FBR Salman Siddique informed the media that the government has decided to withdrawn sales tax exemption on sugar. In this regard, the FBR would approach the Economic Co-ordination Committee of the Cabinet in its next meeting for withdrawal of partial exemption of GST on sugar and would recommend standard rate of 17 percent GST as compared to the existing 8 percent on sugar.
He said that the downward revised revenue collection target of Rs 1,604 billion has been agreed with the IMF for which the Board has approved a roadmap to recover taxes from different potential areas to generate maximum revenue in the remaining months of current fiscal.
After threadbare discussions with the Chief Commissioners, the FBR has chalked out an action plan to generate additional revenue to meet the collection target of Rs 1,604 billion set for 2010-2011. The revised revenue collection target of Rs 1604 billion includes two taxation measures including 15 percent flood surcharge and increase in special excise duty. The actual tax collection target was fixed at Rs 1.667 trillion, however, due to different issues including floods and reduced growth forecast and economic slow down the tax collection target was reduced to Rs 1.604 trillion for 2010-11.
To date FBR has collected Rs 837 billion taxes and a revenue shortfall of Rs 32 billion is being faced in first eight months (July-February) period of ongoing fiscal year 2010-11, he explained. He explained that out of total Rs 130 billion of stuck up arrears, the FBR has estimated to collect Rs 10 billion during current fiscal.
According to FBR data, recovering inadmissible amount of sales tax identified by the IT system would be nearly Rs 40.5 billion including inadmissible input tax adjustment of sales tax Rs 24 billion and supplies made by blacklisted companies is around Rs 16.5 billion. During current year, we expect to generate around Rs 6-8 billion from audit. He further stated that the FBR has collected Rs 392 million from stock exchanges during current fiscal.
When asked about extension in date for filing of quarterly statements by the investors of stock exchanges, FBR Chairman said that there is no need to extend the date for filing of quarterly statements. The investors of stock exchanges can make payment anytime.
He said that FBR was supposed to collected Rs 73 billion additional revenue through conversion of GST in to Value Added Tax and due to political opposition of VAT in the country FBR is unable to generate the same. A road map or a contingency plan has been approved in the conference to bridge this shortfall especially in the area if income tax and sales tax, he added.
Sharing short-term enforcement plan, FBR Chairman informed that 1000 top non-filers of sales tax returns companies have been identified and tax offices have been given a deadline to issue them notices by March 15 and recover sales tax from them by May 15. Similarly, 1000 short-filers companies of sales tax have also been identified and tax officials have also been given a deadline to issue them notices by March 15 and recover due sales tax from them by May 15.
FBR Chairman disclosed that sales tax officials have allowed Rs 50.5 billion inadmissible input adjustment to the sales tax registered persons and refund against supplies made by black listed sales tax registered persons. This has been done against the law and FBR would initiate action against such sales tax registered persons and would recover the amount from them by May 15, 2011.
On the direct taxes side, FBR Chairman informed that some 100,000 corporate entities are not filing their mandatory corporate tax return and we have selected some 50,000 corporate companies for enforcement of their returns and collection of due corporate tax by May 15.
FBR Chairman informed that at present some Rs 130 billion-tax arrears are to be realised and FBR intends to recover at least some Rs 10 billion by May 15 through decisions on the cases from relevant courts. FBR Chairman said that withholding tax collection audit of the banks, airlines and motor vehicles registering departments of the provinces have been ordered and handsome amount of withholding tax Rs 6 billion to Rs 8 billion is expected to be realised under this exercise.
Relying to question on withdrawal of GST exemptions, FBR Chairman stated that there are two ways to withdraw sales tax exemptions. Firstly, certain exemptions have been allowed through the SROs and these can be withdrawn through the same. However, the decision to withdraw sales tax exemptions through notifications would be decided by Ministry of Finance. Secondly, some GST exemptions were allowed through legislation and these would require amendments through parliament in the relevant legislation for withdrawal.
When asked about withdrawal of self assessment scheme, he categorically informed Universal Self Assessment Scheme (USAS) in all taxes to remain intact and FBR do not have any plan for its withdrawal, however, this scheme would be subjected to audit.
He explained that Pakistan Automated Customs Clearance (PACCs) is very much on track and FBR has got it extended and notices have been withdrawn by the concerned company. He mentioned that some 1000 changes have been made in the tax bureaucracy and no one has been thrown out of tax machinery, now onwards all the officials would be answerable to their member concerned.
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