H2 revenue strategy approved by FBR

ISLAMABAD: The Federal Board of Revenue has approved a national revenue strategy for second half (January-June) 2011-12 to generate an additional amount of Rs 50-60 billion through administrative and enforcement actions in the remaining period of current fiscal year for meeting the laid down annual revenue collection target of Rs 1,952 billion in 2011-12.

Sources told Business Recorder on Monday that the strategy to generate maximum revenue in the third quarter (January-March) 2011-12 was discussed during the 8th Chief Commissioners' Conference held with the FBR Chairman Salman Siddiq in the chair at the FBR House.

The national revenue strategy to achieve the budget targets for January, February and March 2012 has been finalised by the Chief Commissioners of the LTUs/RTOs under the guidance of FBR Member Inland Revenue.

The administrative and enforcement action to be taken in the second half of 2011-12 included recovery of tax arrears, broadening the tax base, audit, recovery of illegal tax adjustments and compliance of tax laws by the withholding tax agents. The FBR has already generated additional revenue of Rs 25-30 billion from administrative and enforcement measures and remaining amount would also be recovered during the second half of 2011-12.

It has also been decided to raise income tax demands through effective audit of the registered units to improve revenue collection. The FBR has decided to raise the income tax demand in cases where due tax is admissible in gross cases of concealment of income and under-statements. At the same time, FBR would focus on withholding agents to enforce filing of tax statements by the agents to obtain information about the payees and from whom tax has been deducted. The un-registered withholding agents would be registered and amount of tax deducted by these agents would be recovered. The recovery of income tax surcharge wherever applicable would be ensured so that all persons liable to pay surcharge must have discharge their responsibility. The FBR has estimated to recover around Rs 20 billion from income tax surcharge from concerned units including corporate entities.

The Chief Commissioners and tax authorities also discussed the strategy for selection of cases for audit through random balloting to be held next week. The FBR had earlier decided to convene the random balloting at the FBR House last week and later it was decided to complete the task in next week. It has yet to be decided whether the computerised random balloting would be done and what would be the mechanism for such kind of balloting for audit selection purposes.

There was a general consensus in the conference that the Chief Commissioners of Large Taxpayer Units (LTUs) and Regional Tax Offices (RTOs) would maximise their efforts to achieve the budgetary target for third quarter (January-March) 2011-12. This would reduce burden on the field formations in the last quarter for meeting the annual tax projections of Rs 1952 billion by the end of current fiscal year.

During the conference, tax authorities have directed the Chief Commissioners of Faisalabad, Sialkot and Gujranwala to make extra efforts for improving revenue collection in the remaining period of current fiscal. While reviewing the overall performance of the Chief Commissioners of the RTOs, it was observed that the performance of some Chief Commissioners needs to be improved in the remaining period of current fiscal.

To check the wrong use of information during broadening the tax-base, the FBR has decided to place some checks on the users of the computers maintaining credible information about the newly discovered taxpayers to prevent any kind of misuse of the information. In this regard, the returns data would be accessed through the computers by placing some checks in the system. The purpose of the exercise is to check any misuse of the sensitive information of the taxpayers declared in their returns.

On the issue of broadening the tax-base, Director General Intelligence and Investigation Inland Revenue gave a presentation on the measures to further expand the tax net. It has been decided that the data would be shared among the Chief Commissioners of RTOs to check and verify declarations made by the potential taxpayers under the ongoing exercise of documentation. The sharing of data between the Chief Commissioners of RTOs would further facilitate the tax department in checking the authenticity of the declared data through verification with the available databank of the FBR. The cross matching of data has been allowed by sharing of information simultaneously among the Chief Commissioners of RTOs.

It has been decided that the notices would be issued to all remaining persons who have not filed their income tax returns and statements. The whole exercise would be competed in the next 1-2 months to ensure recovery from April 2012 from non-compliant persons and newly registered persons.

It has also been decided that the FBR will take action against non-filers of income tax returns, particularly nearly 1.6 million NTN holders, for tax year 2011 from January 2012. Out of 3.2 million NTN holders, around 50 percent are non-filers of returns, and action would also be taken against these non-filer NTN holders. Thus, nearly 1.6 million NTN holders have failed to file their returns for the tax year 2011.

Sources said that the FBR has also directed the Chief Commissioners of RTOs to verify the agricultural income declared by the newly discovered taxpayers. In this connection, the Chief Commissioners of RTOs would write to the concerned Provincial Chief Secretaries to verify the authenticity of the declared agriculture income with the help of provincial database.

While congratulating the Chief Commissioners on their performance during first half of current fiscal, FBR Chairman Salman Siddiqui directed the Chief Commissioners of RTOs to bring the owners of big houses and vehicles into the tax net. The exercise of documentation would be intensified for bringing rich persons into the tax net.

FBR Chairman was very happy over the performance of the Chief Commissioners of the LTUs and the RTOs and congregated them for showing good performance during the first half of current fiscal. FBR Chairman and FBR Member Inland Revenue were confident to achieve the ambitious revenue collection target of Rs 1952 billion keeping in view 27 percent growth in revenue. Tax authorities showed full confidence in the Chief Commissioners of the LTUs and the RTOs with the hope that the field formations would be able to continue to maintain momentum in growth in revenue collection during the remaining period of current fiscal.

The FBR Chairman was also happy over the teamwork and efforts made by the field formations in meeting the assigned targets during the first half of 2011-12 and it is expected that the field officers would continue to maintain momentum of revenue collection during January-June period of 2011-12. Tax authorities have also appreciated the field formations for completing the difficult task of meeting the revenue collection targets during first half of 2011-12.

Director General Customs Intelligence also informed the conference about the update on recovery of illegal tax adjustments detected by the directorate in the past. It was informed that the directorate of intelligence Customs had recovered an amount over and above Rs 2.4 billion from the claimants of illegal input tax adjustments.

It was prime responsibility of the field formations to check issuance of fake/flying invoices and fraudulent tax adjustments in the field formations. Similarly, field formations have to take proper measures to avert such kinds of mega scams. However, the field formations should be more careful in future to check the fraudulent input tax adjustments through proper audit and verifications of payments within the entire supply chain under relevant provisions of the Sales Tax Act 1990. The Director General Intelligence Customs was hopeful to recover the remaining amount of nearly Rs 30 billion in future, DG intelligence informed the conference.

On the issue of new amnesty scheme for the sales tax defaulters or claimants of illegal input tax adjustments, the conference has not taken any decision for the announcement of the scheme. It was pointed out that one way is to legally pursue these cases in courts to recover the illegal adjustments claimed by the registered persons. The second option is to pt the method to recover defaulted amount more quickly without fighting in the courts. However, the FBR has not taken any final decision during the conference on any amnesty scheme for the tax defaulters.

FBR Member Legal gave an overview on court cases and recovery position in major cases. FBR Member Taxpayer Unit also shared latest position of the Isaf/Nato containers case.

The conference also reviewed the progress on liquidation of sales tax refunds up to Rs 100,00 up to December 2011 and strategy to liquidate the balance returns by January 31, 2012 has been finalised during the conference, sources added.