The Federal Board of Revenue (FBR) is weighing the pros and cons of revising the annual revenue targets of the LTUs and RTOs, Business Recorder learnt on Friday. Sources said that Karachi LTU and RTO have sent letters to the board, asking for reviewing the budget targets, which are at present considered to be a formidable task to achieve.
They said the board has fixed Rs 130 billion each as the revenue target for both tax offices which, in their view, is exaggeratedly allocated as compared to last fiscal year, and added that the target should be fixed below Rs 100 billion each.
Sources in Karachi RTO claimed that the revenue target could not be achieved as over 100 revenue generating engines were transferred to the LTU. Hence the target should be revised. However, the LTU said that the budget of the department could not be increased in the same proportion as that of RTO as almost all budgetary measures taken through Finance Act, 2009 were enhancing RTO's collection but creating adverse impact on the LTU's collection.
They said that the amendment in section 29A of Income Tax Ordinance, 2001, which made the deduction of 1 percent of total advances on account of provision of bad debt admissible, would enormously reduce the collection of LTU. "Though it was introduced after long negotiations with Pakistan Banking Association and almost all legal issues were taken into consideration to ease out litigation, it is likely that new issues will easily crop up in near future," they maintained.
They further said that the decision to increase the rates of withholding tax would also negatively affect the payments of advance tax under section 147 as the taxpayers would adjust such withheld taxes from their advance tax instalments. They, however, added that the credit of taxes withheld under the heads import/export/profit or debts/cash withdrawal/commission on petroleum/telephone is directly taken by RTO and any increase in the rate of WHT under any head would increase the collection of RTO only. They regretted that the board has so far not defined any clear policy in this regard, and called for taking positive measures to redress the issue.
Moreover, sources said that out of 64 cases, which were picked from among 113 cases for composite audit, some 45 cases have declared huge losses in tax year 2008, which is also another hurdle in achieving the budget target. They said the recoverable arrears demand and current demand are only Rs 3089 million and Rs 37 million respectively. Therefore, the department has urged the board to revise the revenue target to a rational level.
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