The Ministry of Finance has directed the Federal Board of Revenue (FBR) to bring around 100,000 persons per month into the tax net under the countrywide exercise of broadening the tax base. Sources told Business Recorder here on Saturday that the Finance Ministry has fixed an ambitious target of 100,000 persons per month for FBR to broaden the tax base and register potential persons with the tax department.
The issue of broadening the tax base was discussed in the last meeting of Revenue Advisory Council, FBR and Ministry of Finance to suggest measures for improving revenue collection and broadening the tax base. Ministry of Finance has also constituted a committee, with the specific goals to analyse sectoral tax contribution for the last three years, and to develop a database of non-taxpayers, or those indulging in under-reporting of taxes. The committee, comprising Nasir-ud-Din Khan, Chief Executive of Pakistan Revenue Automation Limited (PRAL), Ali from Nadra, and MA Mannan, Chief Executive of Dubai Islamic Bank for analysis of sectoral collection.
According to sources, the Finance Minister has decided that based on the databank developed by the Chief Executive of PRAL, FBR should take up the cases of about 100,000 persons each month for bringing them into the tax net. The tax officials have to approach at least 100,000 persons for expanding the tax base. An attempt would be made to approach these persons to expand the tax base.
It is not necessary that each and very person being approached could be a potential taxpayer, but exercise would definitely increase the number of persons having valid NTN. When contacted, a tax expert said that target of 100,000 persons could be achieved by allocation of National Tax Numbers (NTNs) to the potential taxpayers. Once the NTN is allocated to the taxpayer, he would automatically come into the tax net. In this way, the FBR can show its performance that a large number of persons are into the tax net due to allocation of NTN to them.
The major issue is enforcement of filing of returns by the NTN holders. There is a huge gap between the NTN holders and those actually filing income tax returns. The problem is related to the compliance by the NTN holders in the field formations.
Experts said that NTNs have been allocated to persons on the basis of lists obtained from trade bodies, motor vehicles registration authorities and other sources in the past. During survey for documentation of economy in the past, the department had issued NTNs on its own, based on lists available to it. In such cases there were no applicants, but NTNs were compulsorily allocated to them. In the past, NTNs were also allocated to the employees on the basis of employers'' statements.
The department has to see whether all such NTN holders are real taxpayers liable to file returns. Experts apprehended that in view of the over-ambitious target of 100,000 persons per month, there is a possibility that the department might issue NTNs on the basis of data obtained from the motor registration authorities, provincial property registrars and other external sources. If application has not been received, the department should not compulsorily issue NTN to the person.
The department should avoid such kind of techniques to broaden the tax base by allocation of NTN on the basis of computerised national identity card numbers (CNCIs) obtained from external sources where applicants have not applied. The FBR has already withdrawn the condition of telephonic verification of the applicant for allocation of NTN.
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