One of the proposals for documentation of economy is to tax the information technology-related services, including internet, software development, advertisement, and other related services. It is learnt that the Federal Board of Revenue (FBR) has received a report of the Directorate-General of Internal Audit Inland Revenue to increase the number of new taxpayers for broadening the tax base.
According to the report, internet services, medical transcriptions software development, advertisement and other services are being rendered in enormous quantum. In India, Banglore, the information technology-related services started at individual level by various professionals a decade ago. Unexpectedly, growth rate was highest in the world. The Indian export of IT services now surpasses Pakistan''s entire national exports. Experts forecast India''s export sales on account of IT-related services to cross $300 billion in the next 5 to 10 years. In Pakistan, there is huge potential in the area of services but neither there is any documentation in this regard nor any organised control. Off-channel export of IT services is being made, but they are not accounted for due to lack of proper documentation and control.
The FBR has not developed prowess to tap this source of revenue. It is proposed to arrange specific foreign training of officers and officials and benefit from the experience of the contemporary world. This will also help identify handsome number of new taxpayers.
The FBR has also received a proposal from its internal audit department that air travel tickets bear no identification, in terms of computerised national identity card (CNIC) or National Tax Number (NTN). The tax department should have access to the airlines'' computerised ticketing records. A Repository should be established to capture such information. The field officers may be given access to identify their respective cases and utilise the information in audit as well as broadening the tax base. In markets, sales are being made without drawing any cash memo. The FBR may consider setting up a task force which may enforce documentation, at least in selected areas and market, the report said.
The liability to sales tax registration arises, but people are not registered to sales tax. FBR has no means to detect such default. There is a need to develop legislation as without having powers to spot check; the loopholes cannot be plugged. It has been further proposed that huge advertisements are being made at print media, electronic media and hoarding signs. Most of the input materials used (colours, flex sheets, etc) are imported.
There should be some level of documentation, so that the information can be utilised properly. The investment in real estate business is a huge area, which is neglected. The registration of properties at stamp duty rates has become very common, although, actual prices are high manifold. Documentation requirement in this regard may be reviewed, the report said.