Assessment drive: returns filing by rich picks up in May-June 2011

The Directorate General of Intelligence and Investigation, Inland Revenue, Federal Board of Revenue (FBR) has witnessed a positive trend in the returns filing by wealthy persons in May-June 2011 after launching of provisional assessment drive under section 122 (c) of the Income Tax Ordinance 2001.
Sources told Business Recorder here on Monday that the directorate is expecting over 10,000 returns in June 2011 responding to notices of non-filing of returns. By end May 2011, around 10,000 income tax returns have already been filed by the un-documented persons along with the payment of tax.
As a result of the exercise of the provisional assessment against the non-compliant persons, a number of persons have stared filing their income tax returns in May-June 2011. For example, recently income tax demand of Rs 133 million has been raised against 300 cases in Lahore. Resultantly, 200 income tax returns have been filed by the taxpayers in Lahore. The directorate has already raised income tax demand of over Rs 3 billion in 7484 cases of provisional assessment.
The data analysis during May-June 2011 revealed that the people have stared realising to pay the due amount of tax instead of going into litigation or responding to notices under provisional assessments of the Income Tax Ordinance 2001. The numbers of returns filed by the taxpayers has shown increase in May-June. In case of provisional assessment under section 122 (c) of the Income Tax Ordinance 2001, the recovery of tax involves legal process, which needs time. Contrary to this, the tax deposited along with the returns directly goes into the national exchequer.
According to sources, the provisional assessments already initiated in the past are expected to the completed by end June 2011. In last month, the directorate had dispatched additional information of over 17,000 Karachi-based high-profile persons to the relevant Regional Tax Office for bringing these un-documented persons in the formal regime. The agency has dispatched the latest profiles of rich persons, who have engaged in earning huge income, but preferred to remain out of the tax net.
These included owners of property, accountholders, frequent travellers abroad with their families and purchasers of luxurious vehicles etc. The directorate has been systematically dispatching information to the field formations to ensure documentation of the wealthy persons.
Sources said that the directorate has provided opportunity to the un-documented persons to explain their source of income before issuing provisional assessment orders under section 122 (c) of the Income Tax Ordinance 2001. The idea is to give maximum opportunity to the concerned persons to voluntarily file their income tax returns to avoid huge amount of penalty and prosecution. The FBR also ask the concerned persons to explain their sources of income to ensure filing of returns and wealth statements.