FBR recovers Rs 1.6 billion from illegal input tax adjustments

Chairman Federal Board of Revenue (FBR) Salman Siddique has said that the tax machinery has successfully recovered illegal input tax adjustment to the tune of Rs 1.6 billion in the wake of current administrative and enforcement measures in last quarter (April-June) 2010-11.
On the launching of Economic Survey (2010-2011) here at the Planning Commission on Thursday, he told Business Recorder that an amount of Rs 1.6 billion has been recovered from illegal sales tax adjustments claimed by registered persons. He was confident that the FBR would be able to collect maximum amount through enforcement and administrative measures through audit of withholding agents particularly banks in Karachi.
On the issue of documentation of economy, he pointed out the Directorate General of Intelligence and Investigation Inland Revenue (IR) has raised income tax demands to the tune of Rs 5 billion against 7500 un-documented persons. This clearly reflects that the FBR has gained momentum in the documentation drive across the country. In this regard, the FBR will frame cases of provisional assessments against the un-documented persons under section 122 (c) of the Income Tax Ordinance 2001.
When asked about items to be covered under the slab of 5 percent sales tax in budget 2011-2012, FBR Chairman said that the slab of 5 percent would cover local supplies of zero-rated sectors. It is important to mention here that the input of these five major export sectors will remain zero-rated and the present system of four and six percent sales tax on registered and unregistered units, respectively, will be merged into a fixed tax of 5 percent.
Responding to a query, he said that keeping in view current pace of revenue collection the FBR would be able to surpass the revenue collection target of Rs 1588 billion for 2010-2011. On the last day of May 2011, the FBR was able to collect over Rs 18 billion including Rs 13 billion from banks and Rs 5 billion from an oil company, Salman Siddique added. SRO, he categorically said that the SRO could not be issued without the approval of the Economic Co-ordination Committee of the Cabinet or approval of the Ministry of Finance. The FBR cannot solely issue SRO on its own.
FBR Chairman said that the FBR has detected Rs 20 billion as short-deductions in the withholding tax audit of banks. In the banking sector, these short-deductions have been detected during recent audit of the banks under the provisions of the Income Tax Ordinance 2001. The demands have been created and recovery process is underway. The administrative and enforcement measures have started showing results particularly audit of different sectors. As a result of documentation drive, over 9,000 non-filers have filed their income tax returns.
To a question on revenue collection, Salman Siddique stated that the FBR has collected Rs 110 billion and Rs 191 billion during May and June of previous fiscal. During the last two months, the FBR has maintained 38-40 percent growth in revenue. The current momentum of growth is likely to be continued in the remaining period of current fiscal. The Board has provisionally collected Rs 1,310.39 billion during July-May (2010-2011) against the target of Rs 1302.600 billion, reflecting achievement in surpassing the 100.6 percent target during the period under review. To meet the target of Rs 272 billion in June 2011, the FBR will be able to generate revenue from last instalment of quarterly advance tax payment in June 2011. The fourth payment of tax advance is due in June and enforcement measures would also be instrumental in generating additional revenue. The FBR will be able to generate Rs 240-250 billion under the normal circumstances from different sectors. However, additional efforts are under way to collect Rs 25-30 billion to meet the target of last month of current fiscal.