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ISLAMABAD: The Federal Tax Ombudsman (FTO) Thursday recommended the Federal Board of Revenue (FBR) to create a separate directorate general of auctions, revise valuation rulings, expand scope of ‘FASTER’ refund system to other sectors and devise a foolproof online system to electronically allow credit of tax payments/deductions at source.

According to budget proposals of FTO Office for fiscal year (2021-22), submitted to FBR, the new budget proposals are meant to strengthen and streamline the business processes to enhance tax collection and facilitate taxpayers.

The FTO Office said that about 70-75 percent cases of delayed refunds in income tax, causing trust deficit on the FBR, fall in the category of less than Rs. 0.100 million. The refund system ought to be dovetailed with a magnitude of amount for priority disposal to bridge the trust gap.

It said that verification of tax payments etc is the responsibility of the department but the taxpayers are invariably asked to get it (payment/ deduction at source) done on their own, for claiming refund, adding the FBR should devise a foolproof online system to electronically allow credit of payments/deductions of tax at source to the taxpayers as soon as the process of filing of refund claim is complete.

It also recommended that the number of return filers needs to be enhanced on priority basis.

Following measures are proposed to broaden the tax net: (I) withholding tax and advance tax data may be fully utilized to bring the potential taxpayers in the tax net. (ii) the data available with the banks, excise and taxation offices regarding vehicle registration and energy providing companies (electricity & gas) of industrial and commercial meters, should be analyzed/used for broadening of tax base.

It recommended that the FBR may proactively assist and help the banks for introduction and installation of IT software to enable their concerned branches for receiving the duties/taxes, etc.

About the manual processing of refunds, the FTO stated that non-processing of refund claims through electronic mechanism except for export related refund claims is causing hardship to the taxpayers. It is proposed to expand the electronic processing of refund claims like FASTER to all sectors covered under section 4 and Fifth Schedule of Sales Tax Act 1990.

It is proposed that all valuation rulings are not revised on regular intervals in spite of fluctuations in the import price of various commodities and for this, all valuation rulings should be revised on regular basis on intervals not exceeding two years.

It proposed that non-transparent and delayed auctions lead to delay in revenue realization and port congestion. It is proposed to create a separate directorate general of auctions for speedy, transparent and uniform processing of auction procedures throughout the country by using the e-module of auctions.

The FTO has further recommended that revenue of billions of rupees remains stuck up at various legal fora for want of adjudications mainly due to stay orders. Moreover, billions of rupees of revenue is also stuck at the various adjudication fora and collectors/commissioner (Appeals). Ministry of Law may be approached for creation of special benches of the High Courts and Supreme Court of Pakistan for hearing of cases on day to day basis to eliminate the pendency. Moreover the offices of collectors of customs (adjudication/ appeals) and commissioner (appeals) may be provided sufficient staff and logistics support to eliminate pendency.

The FTO further recommended that huge number of commercial and industrial units have single or multiple connections of electricity/gas and other utilities in fictitious names of non-tax filers to avoid their income tax and sales tax assessment by staying within the limit of Rs.1.2 million exemption regime.

This needs to be addressed by the director general of intelligence inland revenue to analyze their production with their declared electricity consumption. To perform this job the Directorate General of Intelligence Inland Revenue may be suitably strengthened, FTO office added.

Copyright Business Recorder, 2021

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