Tax survey of big markets likely

The Federal Board of Revenue is likely to conduct a national tax survey of posh markets, business establishments, departmental stores and big retail outlets, etc, to check/verify whether business units/shop owners have obtained National Tax Numbers (NTNs) and filing their income tax and sales tax returns regularly.
Sources told Business Recorder here on Monday that the idea of national tax survey was discussed during the Board-in-Council meeting chaired by FBR Chairman Salman Siddiq. It has been brought to the notice of the tax authorities that an alternative plan has been finalised for broadening the tax-base and bringing undocumented persons into the tax net.
Board-in-Council discussed that the national tax survey would not focus on checking of stocks or examination of books of accounts of the owners of big shops, departmental stores and leading retail outlets, etc. The purpose of the survey is not to check stocks of the manufacturing units or factories, but to only check the tax status of the taxpayers. It would be physically verified that whether the person is on tax roll or not. In case the competent authority gives approval of the national tax survey, it would be conducted in a systematic manner.
Firstly, the tax department would only check the tax status of the shopkeepers and owners of such departmental stores and big retailers and shopkeepers. Secondly, the department would check whether the shop owner in posh markets have obtained the NTN and filing his return.
Thirdly, if the person is liable to be registered with the sales tax department, it would be checked whether the person has obtained the sales tax registration number and regularly filing monthly sales tax return. Fourth, the tax department would physically go to the shops to check the nature of business and overall size of business being conducted at the shops, retail outlets and business establishments etc in posh markets.
This would be instrumental in checking the nature of business and those persons, who have closed their businesses and could be declared as inactive taxpayers. The FBR would also be able to identify the dormant units through the national tax survey.
Fifthly, the national tax survey would also identify the number of shops located in each posh market of big cities. Sixthly, it would be checked whether all shops are operative and conducting business on regular basis. Seventhly, if the business unit has obtained the NTN, survey would check whether the owner has prominently displayed the NTN outside the shop.
Sources said that the national tax survey would continue along with the documentation of potential persons using third parity information and database from external sources. Only in case of Lahore, a sample survey revealed that the out of 900 cases in posh areas, 570 units were not even on the tax roll of the FBR. This clearly pointed towards immediate need of national tax survey for documentation of the economy.
Sources said that if the FBR gives go ahead signal, the tax department would obtain merely basis information in posh markets etc without demanding any stocks details or books of accounts or quantity of stocks cleared from the shops etc. The survey would only be conducted following approval of the competent authority to check tax status of the shopkeepers without causing any harassment to the taxpayers.
The Board-in-Council also decided that notices would also be served to more undocumented persons under the ongoing exercise of broadening the tax-base. The tax profiles of more potential persons would be maintained for bringing maximum persons into the tax net and the process of the documentation would be expedited in the next three months ie first quarter of 2011-12.
The issues of stuck up arrears in courts and recovery of demands were also discussed during the meeting. The matching of sales tax and income tax returns would also be done to determine the actual turnover and sales of the registered persons, sources added.