ISLAMABAD: The Senate Standing Committee on Finance Wednesday directed the Federal Board of Revenue (FBR) to introduce legislation to jail tax officials who are sending notices to deliberately raise frivolous tax demands against the taxpayers.
The committee members asked the FBR to explain the rationale behind the tax calculations of Rs64 billion worked out against the non-filers, whereas, the actual tax deposited with returns stood at only Rs2.5 billion during the last three years.
The FBR chairman responded that Rs64 billion is the amount of tax chargeable on the basis of income tax returns filed by identified persons.
The FBR Member Inland Revenue (Operations), Dr Muhammad Ashfaq Ahmed, Wednesday strongly defended before a parliamentary panel, issuance of over 12 million system-based notices to non-filers during 2018-19 to 2020-21.
Dr Ahmed stated that each notice was electronically served to the non-filers without involving any human intervention.
Referring to the anti-fraud investigations, he said that the FBR has framed 10,000 cases against the buyers/sellers of properties on the basis of e-Stamp data received from the provinces.
Chairman of the committee Senator Talha Mahmood stated that we have received complaints of excessive tax demands raised before June 30, 2021 to generate revenue. There must be a strict punishment for the tax officials involved in creating excessive tax liabilities. This is harassment and needs to be checked by the FBR.
The FBR wanted to raise tax demands against the non-filers.
At the same time, the officials involved in sending illegal notices to the taxpayers should also be punished. He stated that there is a clear contradiction in the statement of the Finance Minister, Shaukat Tarin, on record and the FBR’s practical demonstration in issuance of notices to the non-filers of income tax returns. When chairman of the committee asked the FBR that instructions have been issued to the field formations to raise excessive tax demands or issue notices, Dr Ahmed categorically, stated that no such instructions have been issued to the field formations. Committee members inquired from the chairman FBR about the punishment to the tax officials involved in sending bogus notices to the taxpayers.
Briefing the Senate Standing Committee on Finance on “tax notices issued during the last three years” here at the Parliament House, the FBR Member IR Operations stated that now the income tax return filers stood at over three million.
Out of 12,785,497 million notices served to non-filers during the said period, 1.31 million filed returns with tax payment of Rs2.5 billion. Total income tax calculated was Rs64 billion in the cases of non-filers. The FBR Member stated that the desk-audit of almost 90 percent of the income tax return filers have been conducted, but notices were served to only selected potential cases.
Even in cases of multinational companies, it has been found that the actual sales in bank statements revealed Rs50-Rs100 billion as compared to the declared sales of Rs2-3 billion.
Futuristically speaking, total audit of 1-2 percent of the total returns would be conducted through the chartered accountant firms to be hired by the FBR.
He informed that 846,296 filed returns against issuance of 4.3 million notices during 2020-21. Out of tax calculated of Rs42 billion, Rs1.66 billion was paid with the income tax returns. In 2019-20 period, 6,321,903 notices were served to non-filers.
Returns filed stood at 297,282 against tax deposited of Rs669 million. Tax chargeable was Rs12.709 billion.
During 2018-19, the FBR issued 2.1 million notices and enforced 172,342 returns with tax payments of Rs259 million against tax calculated of Rs9,037 billion.
Dr Ashfaq stated that the FBR has served notices for correction of assessment of Rs683,141 million in 2018-19 to 2020-21 and passed orders of Rs519.346 billion, creating tax demand of Rs1.347 trillion during this period.
Senator Faisal Saleem Rahman informed the committee that the notices have also been issued to the already registered taxpayers.
Senate Standing Committee on Finance has further directed Finance and Commerce Ministry as well as the State Bank of Pakistan (SBP) to investigate and submit a report to the committee in a month as to why PayPal was not operating in Pakistan.
The finance committee meeting presided over by Senator Talha Mahmood and other members of the committee were told that world over Amazon was working through PayPal, while in Pakistan it was not operating. The committee wanted to know as to what are the barriers in Pakistan that stop PayPal to begin operation.
On the suggestions of secretary finance that minister for commerce should be asked to go deeper into the matter to find out whether there was any barrier in Pakistan that was preventing it from operation.
The committee agreed to the secretary finance’s proposal and gave one month time to finance, commerce and SBP to investigate the matter and submit the report to the committee. An official of the SBP said that there was no barrier for PayPal from the SBP.
Copyright Business Recorder, 2021