Tax deductions, statements filing: WHT agents fail to comply with major step

Over 700 sales tax registered persons operating as withholding agents have failed to comply with a major budgetary measure (2013-14) meant for deduction of income tax and filing of monthly withholding tax statements for current fiscal year. Sources told Business Recorder here on Tuesday that the scope of prescribed person for the purposes of Section 153 was extended to 'a person registered under the Sales Tax Act, 1990'.
It means that every person registered under the Sales Tax Act, 1990 shall also deduct income tax at the prescribed rate. The sales tax withholding agents were required to deduct along with filing of withholding tax statements. However, these sales tax registered persons have not complied with the provisions of the new budgetary measure of 2013-14.
Sources said that only in few month people are making purchases to the tune of billions of rupees on which they were to withhold income tax at prescribed rate during the current financial year. The prescribed rate of tax is 3.5 percent for companies and 4 percent for non-corporate units under section 153 of the Income Tax Ordinance. If these defaulters are pursued vigorously the recovery alone from this budgetary measure can go up by estimated around Rs 3 billion per month.
The FBR has also analysed purchases of billions declared by the withholding agents in their sales tax returns, but generally they defaulted in filing of withholding tax statements on the income tax side as well as they also failed in making the payment of withheld income tax. It is understood that certain taxpayers have obtained exemption certificates which makes their sales exempt from withholding tax.
A tax expert was of the view that the purpose of merger of domestic taxes was to bring them on same page however, this did not happen rather the reform money was spend more on furnishing offices and creating posts. Now, the FBR is utilising the information available on the sales tax side for plugging the leakages on the income tax side. If this technology of integration is on the right track and made the driving engine, it could be instrumental in raising tax-to-GDP ratio.
The Computerised Risk-Based Evaluation of Sales Tax (Crest) of the Federal Board of Revenue (FBR) has been able to successfully detect income tax discrepancies on the basis of sales tax data. The Crest has played a key role in checking such defaulters of withholding tax statements based on analysis of sales tax data, sources maintained.