The Federal Board of Revenue (FBR) is likely to enhance the rate of ''default surcharge'' to discourage the short filers. Sources told Business Recorder on Sunday that the issue of short filers was discussed threadbare during the last sales tax collectors conference.
Short filing has been considered as a crime and requires immediate measures by the authorities. Some collectors suggested that the rate of ''default surcharge'' is very low, which does not bother the short filers. Under section 11A of the Sales Tax Act, 1990, where a registered person pays the amount of tax less than the tax due as indicated in his return, the short paid amount of tax along with default surcharge shall be recovered from him.
The authorities had directed the Sales Tax Wing to examine proposal to increase the rate of default surcharge for improving enforcement. The board may rationalise the rate of default surcharge as per bank mark-up rates. Previously, additional tax regime was close to the bank rates.
Collectors also brought to the notice of the board that many registered taxpayers were either filing ''nil'' returns or were short filing sales tax. This trend needed to be checked through some effective mechanism or enhancement of surcharge, they said.
Following rates of default surcharge are applicable under Sales Tax Act, 1990: For the first six months of default, person liable to pay any amount of tax shall pay default surcharge at the rate of one percent per month of the amount of tax due.
From seventh month onwards, the person liable to pay any amount of tax shall pay default surcharge at the rate of one-and-a-half percent per month of the amount of tax due till such time as the entire liability including the amount of default surcharge is paid.
In case default is on account of tax fraud, the person who has committed tax fraud shall pay default surcharge at the rate of two percent per month of the amount of tax evaded or the amount of refund fraudulently claimed, till such time as the entire liability including the amount of default surcharge is paid.
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