FBR notifies establishment of Directorate General I&I IR

The Federal Board of Revenue (FBR) on Monday notified establishment of the Directorate General, Directorate of Intelligence and Investigation, Inland Revenue (I&I, IR) having powers of income tax assessment and audit of new taxpayers for detecting cases of fiscal frauds, non-reporting, under-reporting and concealment of income by persons evading direct taxes.
In this regard, the FBR issued an office order in major step for documentation of economy. Through another notification issued on Monday, the FBR has re-designated five posts for creation of the new directorate covering direct taxes, sales tax and federal excise duty. The agency would play a key role in documentation of the economy by conducting functions of economic and fiscal intelligence to collect data for discovering big evaders, the order said.
Sources told Business Recorder here on Monday that the new intelligence agency of FBR would assist the FBR Inland Revenue Wing in broadening the tax-base. The agency would be empowered to conduct income tax assessment and provisional assessments under section 122 and 122 (c) of the Income Tax Ordinance 2001.
The agency would operate in a systematic manner on the basis of authentic database to unearth cases of fiscal frauds and under-reporting or non-reporting of taxes. The beauty of the functioning of the new DG Intelligence IR is that it would not create any parallel system to the self assessment scheme and support existing IR Wing in expanding the tax net.
Firstly, the directorate would issue letters to the non-filers under section 114 of the Income Tax Ordinance 2001. In the next phase, the agency would have the authority to issue notices to big taxpayers giving them opportunity to explain their income based on solid evidence and third party information. In case of non-compliance, provisional assessment under section 122 (c) would be completed against such persons.
Each Unit busy in Broadening of Tax Base at the Regional Tax Office (RTO) would have all assessment, tax collection, enforcement and legal powers for handling newly discovered taxpayers. The Unit In-charge of the BTB would be empowered to enforce filing of returns for at least three years. If there are glaring mistakes or huge concealment of income, the agency would conduct audit of such persons, if necessary. Otherwise, returns would be accepted under the self assessment scheme, ensuring filing of returns for at least three years.
According to the FBR order, to take the spirit of tax reforms forward and with a view to assist the field formations to increase the tax base, the existing Director General of Broadening the Tax Base of FBR is renamed as Director General, Directorate of Intelligence & Investigation, Inland Revenue.
Following are the core functions of the newly established organisation: Broadening of Tax-Base: It would have the mandate to broaden the tax base, aiming at netting potential taxpayers. Access to Major Data Bases: The directorate would have linkages with all major national, provincial and regional databases.
Cross matching of Data with master index and tax profiles: It would have the authority of cross matching for the purposes of countering non-reporting and under reporting. Complaint handling: The agency would be empowered to handle complaints referred by the Chairman FBR (under FBR Act).
Financial Investigation: It would conduct preliminary investigation as entrusted by FBR, so as to determine the possible loss of revenue potential in cases as maybe identified by the organisation. Economic & Fiscal Intelligence: It would discreet information gathering on all Tax related issues, non-reporting, under-reporting, tax evasion, connivance between tax evaders and tax collectors, fiscal fraud, and revenue leakages.
Under the organisation structure of the DG Intelligence IR, the Directorate General I & I, IR would comprise Director General, Director HQs and three Directors based in Karachi, Lahore and Faisalabad. The Director Karachi would cover the provinces of Sindh and Balochistan. The Director Lahore would cover Civil Divisions of Lahore, Gujranwala and Sahiwal of Punjab province. The Director HQs would look after ICT, Civil Division of Rawalpindi and KP in addition to his assignment at HQs. The Director Faisalabad would look after I&I operations in the civil Divisions of Faisalabad, Sargodha, Multan, Bahawalpur and DG Khan of Punjab province.
The existing vigilance units working at Directorate General I&I, FBR (Customs Intelligence), currently manned by the officers/officials of IR shall form the operational nucleus of this Organisation. Under the reporting mechanism of the directorate, the Intelligence and Investigation (I & I), Field Units will report to the respective Regional Directors. The directors would be responsible to DG, I &I, IR-FBR and DG, I & I, IR would report to the Chairman, FBR.
About the technical status of I&I's operations, the FBR said that the Tax Policy Wing, IR would initiate draft legislation for incorporation of Directorate General, I&I, IR as a Tax authority in all the three domestic tax statutes. Meanwhile, Directorate General I&I, IR-FBR would be restricted to information gathering, processing, segregation, dissemination and monitoring.
All wings of FBR would extend full assistance to Directorate General I&I, IR in its operations/initiatives. The dedicated Regional BTB Units (working under the control of respective Chief Commissioners-IR) would be provided solid, segregated and relevant information by I&I, IR.
The progress in respect of utilisation of aforesaid information would be monitored by I&I, IR, through a well defined mechanism of Key Performance Indicators. This would be submitted to Member, IR and Chairman, FBR on monthly basis (or earlier) for performance review at their level. The Central Data Bank/Base of IR Wing shall be maintained by Hqrs I&I, IR, it added.
According to the notification, Chairman FBR has re-designated five posts with immediate effect and until further orders. The post of Member (BS-21), FBR (Hqrs), Islamabad has been re-designated as Director General (BS-21), Intelligence & Investigation (Inland Revenue), Islamabad; one post of Chief (BS-20), FBR (Hqrs), Islamabad as Director (BS-20), Intelligence & Investigation, Inland Revenue (Hq) Islamabad; one post of Commissioner-IR (BS-20), RTO, Karachi as Director (BS-20), Intelligence & Investigation, Inland Revenue, Karachi; One Post of Commissioner-IR (BS-20), RTO, Lahore as Director (65-20), Intelligence & Investigation, Inland Revenue, Lahore and one post of Commissioner IR (BS-20), RTO, Faisalabad has been re-designated as Director (BS-20), Intelligence & Investigation, Inland Revenue, Faisalabad.