The Federal Board of Revenue (FBR) has given opportunity to the un-documented persons to come into the tax net by voluntarily obtaining the National Tax Numbers (NTNs) and file income tax returns to get immunity from audit, penalties and default surcharge.
Commenting on tax incentives announce by the government, Syed Naved Andrabi Advocate Supreme Court told this scribe that the individuals are being given an incentive to come forward and join the tax net. They are being encouraged to declare income without fear of being selected for arbitrary audit. The proposed incentive for individuals is to file their tax returns for the last five tax years without any payment of penalties, default surcharge and Audit.
The minimum tax paid for each of the last five years should not be less than Rs. 20,000. This means a person who has not filed his tax returns in the last five years while he was having/enjoying taxable income; he has now a chance to come forward and declare his true income or at least that income on which tax liability is not less than Rs. 20,000/ per year. No default surcharge or penalty or audit will be charged/levied/initiated against the said person. This is an incentive to broaden the tax base.
A person who has not obtained NTN is being given an incentive to join the arena of tax world. He may come forward and obtain the NTN and then file tax returns for as many tax years he so feels like. Returns filed voluntarily by these new taxpayers (those without NTN) are to be granted immunity from Audit, Penalties & Default Surcharge; provided they file the tax returns for as many tax years they want with tax amount of Rs. 25,000/ per return. This is an incentive for broadening the tax base and the tax collection. This incentive must be availed as once you come on the Tax net and have filed returns the access of information of the taxpayer from the banks will not be in the domain of the FBR. This further means that the Banks will ensure that the account holder provides his tax number. This incentive practically makes the newly-introduced provisions of Section 165-A in the Income Tax Ordinance, 2001 as in operative. The business community shall get relief that their banking transactions are not open to unlimited access. The persons who still would not come on the tax net and pay their due taxes shall be open to scrutiny and audit by the FBR as they have access to information that may be used against the person who is not a voluntary taxpayer or avails these proposed incentives, he said. The people who are already in the tax net and are exposed to arbitrary proceeding by the FBR are also given an incentive to avail immunity from Audit Selection. The existing taxpayer just needs to pay 25 percent more tax from the last year and his tax return shall not be selected for audit. The incentives are like going or reverting back to the laws under the Repealed Income Tax Ordinance, 1979 where each year Self Assessment Scheme was announced and taxpayer was given certain conditions to fulfil including payment of tax like more than last year 20 percent or 25 percent. Looking into economic conditions and the fact that a person is afraid of coming into the net because as per trends the FBR is only taxing those who are in the net and are an easy target to collect tax or meet their annual targets of tax collection, he said.
The incentives are lucrative enough to bring the people into the tax net and broaden the base. The non-taxpayers should come forward to avail the benefit so that the burden of taxation is shared by all. Lastly, he said, it seemed the government has forgotten the salaried class whose entire income is taxable with no allowances or relief. Their salary is taxable at source and they surely feel neglected, he added.
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