Provisional assessment: enforcement action not a revenue generation step

FBR Member Enforcement and Accounting Muhammad Fayyaz Khan said on Friday that the enforcement action of provisional assessment under section 122-C of the Income Tax Ordinance (ITO) 2001 is not a revenue generation measure, but to enforce filing of income tax returns/statements.
During press conference at the Large Taxpayer Unit (LTU), Islamabad here on Friday, Fayyaz Khan explained the rationale behind the enforcement of the provisions of section 122-C of the Income Tax Ordinance 2001. The head of the enforcement department of the FBR was affirmative that the FBR is fully prepared to invoke section 122C with legal backing and authentic database to issue notices to the taxpayers. He was confident that the enforcement provision would also act as an effective deterrent to expand the tax net. FBR Member Enforcement explained that the tool of provisional assessment under section 122C of the Income Tax Ordinance 2001 would not be used for revenue generation. The measure would be used to ensure filing of returns from the potential taxpayers, who are liable to file returns under the Income Tax Ordinance 2001. It is an effective tool to broaden the tax-base, which would be exercised providing all legal opportunities to the taxpayers for filing of returns.
Fayyaz Khan stated that the notices under section 122C of the Ordinance 2001 would be issued to the non-compliant persons along with evidence and data. With the help of authentic data, the department would inform the persons to file their income tax returns. The FBR will provide 60 days period to respond to the notices issued to the taxpayers under section 122-C. In case of non-compliance, further action would be taken against the person as admissible under the law.
The FBR would invoke section 122-C of the Income Tax Ordinance 2001 for making provisional assessment against the taxpayers. He said that the section 122-C of the Income Tax Ordinance 2001 empowers the department to complete provisional assessment of taxpayers, who failed to respond to notices of the department, FBR Member Enforcement added.
It is important to mention here that the key official behind chalking out strategy to broaden the tax base is Muhammad Fayyaz Khan, who had drafted a national plan to enforce provision of section 122-C and other actions needed for expanding the tax net. Due to his effective co-ordination with former FBR Member Domestic Operations, the FBR was able to substantially increase the overall number of return filers and withholding tax statements in past fiscal. He has also written research reports, papers and studies on FBR systems, electronic database, e-filing and refund procedures, which helped the department to plug in loopholes and improve revenue collection.