MONDAY AUGUST 15: FBR plans to check big agriculture income cases

ISLAMABAD: The Federal Board of Revenue (FBR) has chalked out a comprehensive plan to check big cases where investors have declared agriculture income to justify their investment in properties, stocks/shares, luxurious vehicles, foreign travelling, etc.
In this connection, the FBR has issued instructions to the Chief Commissioners of the Regional Tax Offices (RTOs), as it is feared by the tax authorities that in many cases the declared agriculture income is not genuinely earned by the investors.
The FBR has categorically conveyed to the RTOs that the income tax rates specified under Punjab Agricultural Income Tax Act, 1997 cannot be adopted blindly because the said Act levies the tax which is mainly land-based and not income based, and patterns of Agricultural Income Tax in other provinces should also be consulted. However, in cases where the agricultural income returns are genuinely being filed with the provincial Revenue authorities, the declared version shall be accepted as it is, the FBR said.
According to FBR's instructions issued to the RTOs, wherever investment made/assets acquired or expense incurred do not reconcile with the declared income by the new tax payers, action u/s 177 of Income Tax Ordinance, 2001 is warranted, and RTOs do not need any permission from any quarters for the said action. Thus, the RTOs can conduct income tax audit under section177 of Income Tax Ordinance, 2001, wherever admissible.
On the issue of agricultural income, the FBR said that though there are no hard and fast rules governing this regime, yet following a yardstick can be utilised by the field officers:
Firstly, the claims regarding income generation by cultivating leased agricultural lands must be verified by the concerned revenue authorities. Periodical Khasra Girdawaris, prepared by the concerned Revenue Official (patwari), contain the particulars of genuine lease holders and in the absence of any such evidence all such claims do not merit acceptance.
Secondly, the agricultural income declared by the owners themselves needs to be thoroughly examined. Thirdly, the agricultural income declared by the owners themselves, once again, need to be looked into as to whether, if the land is self-cultivated and revenue record confirms the factum of self-cultivation, then reasonability of declared income shall be judged keeping in view the crop patterns, location of land, nature of land (as per revenue record) and on the basis of parallel cases. Sometimes Jhar pedawar prepared by the patwari also helps in ascertaining the actual income, the FBR said.
Fourthly, if the revenue record confirms that the land in question is leased out, then the prevailing rates of lease in the said locality shall be adopted for the determination of agricultural income.
Fifthly, the FBR said that in cases where the agricultural income returns are genuinely being filed with the provincial Revenue authorities, the declared version shall be accepted as it is. Sixthly, in cases where no returns are being filed with the provincial authorities then the cases shall be decided in the light of above-mentioned procedure, as the case may be, the FBR said.
Seventhly, the FBR said that the income tax rates specified under Punjab Agricultural Income Tax Act, 1997 cannot be adopted blindly because the said Act levies the tax which is mainly land-based and not income-based, and, moreover, the FBR covers the whole of Pakistan and patterns of Agricultural Income Tax in other provinces also need to be consulted. Eight, the discreet 'ground check' in certain cases of excessive claims may also be conducted so as to verify the actual position, the FBR procedure added.