IT returns, withholding tax statements: management of non-filers serious problem, FBR observes

The Federal Board of Revenue (FBR) has observed that the management of non-filers of income tax returns and withholding tax statements is a serious problem for tax administration despite reforms. It is learnt here on Tuesday that a document prepared by the FBR Enforcement Wing on reforms revealed that the management of non-filers of Returns & Statements is always a problem for tax administrations.
It is the computer system that detects whole range of non-compliant taxpayers, non-filers, short filers of the Statements and Returns, verification of payments of tax shown as due in the tax Returns, truthfulness of declarations & databases in respect of third party information or that provided by the taxpayers. A rule-based system is required for effective enforcement of tax laws squarely on those required to be "Filer" under the law in addition to the taxpayers already appearing on tax record.
The document said that the percentage of non-filers is alarming, particularly in income tax. There is no computer based system available which could facilitate the concerned officers to identify the actual number of persons who are required to file the returns and transparently enforce various provisions of law, including penal action for enforcement of tax returns. In addition, there is a need to develop or purchase a simple accounting system for small taxpayers. Besides, several impediments to reliable and convenient/user friendly e-filing system under an Integrated Tax Management System also need to he improved for facilitating the taxpayers.
Sources said that the existing numbers of sales tax registered persons is extremely low compared with those actually undertaking taxable business activities. The large number of "payees" of the compliant Sales Tax/Income Tax Returns (electronically) signals towards the actual numbers of persons liable to he registered under Inland Revenue laws and processes.
It is further evident from the fact that a very limited number of prescribed persons actually file the periodic withholding statements regarding Sales Tax and Income Tax deducted by them from payments to their vendors as against the estimated large number of government agencies, attached department and other persons liable to withhold the taxes under respective laws. Enforcement of Returns and Statements from all those liable to file is possible with the help of a computer based system that could help identify and register those undertaking taxable activities, FBR document added.