''''Business Registration Scheme'''' introduced

To promote documentation and curb tax evasion, the Finance Bill 2019 has introduced major measures including introduction of concept of Business Registration Scheme. Through the Finance Bill 2019, a major change has been introduced i.e. amendment in the definition of resident individual. At present, a resident individual for a tax year is defined as an individual who is present in Pakistan for a period of, or periods amounting in aggregate to, 183 days or more in the tax year of 365 days. Now the definition of resident is being amended to include an individual present in Pakistan for a period of, or periods amounting in aggregate to 90 days or more in the tax year and who, in the four years preceding the tax year, has been in Pakistan for a period of, or periods amounting in aggregate to 365 days or more.
A ''''unique'''' provision has been introduced to initiate proceedings against persons committing financial malpractices. In order to effectively check misuse of authority to gain financial benefit, a new enabling provision is being introduced to prescribe rules for initiating criminal proceedings against officers of the FBR who deliberately commit acts or fail to act for personal benefits. Similar action would also be taken against persons who offer bribes or other financial benefits to the tax employees. Another amendment has been made to separate work of Audit from Assessment. At present, when a taxpayer is selected for audit of its tax affairs, the concerned Commissioner Inland Revenue is required to obtain taxpayer''''s explanation on issues raised in audit and thereafter, amend the assessment, if need be. The assessment function of the said process is being separated from the audit function. The functions of audit and assessment shall be performed by separate and independent officers to ensure impartial treatment to the taxpayers.
In order to promote documentation of economy, a novel concept of Business Registration Scheme has been introduced in the Budget 2019. At present, only taxpayers are required to register with the FBR for tax purposes. Persons deriving business income who are otherwise not required to file return being BTL threshold are not required to register themselves. In order to create a verifiable database of all persons deriving business income, a new registration scheme is being introduced where every person deriving business income, even if below the tax threshold shall be required to register with the FBR through NADRA''''s e-Sahulat Centres. Business registration per se would not make the registrant liable to file return. However, it would create a database which would be a source of detecting new taxpayers in the future.
In order to curb the corrupt practices and loss of revenue, lawful authority to amend the order of recovery from withholding agent, has been allowed to the IRS officials; where a tax is required to be collected or deducted by a withholding agent but fails to deduct or collect tax or deposit the same, tax is recoverable from the WHT agent through a recovery order. Such order to recover tax is at times erroneous or prejudicial to interest of revenue but there is no provision in law to amend such order. Therefore a provision to amend order of recovery has been introduced in the subject to the condition that such power shall not be exercised by an officer below the rank of Additional CIR, the Finance Bill 2019 added.