The Federal Board of Revenue (FBR) would use data pertaining to assets as specified in the new Income Tax Returns for the Tax Year 2010 to re-open the cases of those taxpayers who had declared low value of assets or had earlier refused to disclose their source of purchasing the assets.
A leading tax consultant Syed Naved Andrabi told Business Recorder on Sunday that draft of the Income Tax Returns for the Tax Year 2010 has been introduced with certain major changes.
The proposed return for Individuals and AOP''s includes two new Annexure ie, "C" & "D". The Annexure "C" deals with the identification of Net Sales; Cost of Sales and Gross Profit to be declared separately, if the Individual or an AOP has incomes from more than one business activity. The taxpayer would have to show the figures separately and then have them reconciled with the gross figure on the main page of the return form in respective columns.
Three new columns have been inserted on the face of the return to show separately the cost of assets purchased and sold during the year along with a column for personal expenses which is to be detailed in the new Annex "D" attached with the return. It is not clear as to why the column for identification of Assets sold and purchased during the year has been added on the face of the return when for the business assets - Annexure A is available and for personal Assets - Annexure "D has been introduced. The said columns seem out of place and are clearly a duplication of work, Naved Andrabi said.
The IDP tax column has been deleted, as it is no more applicable for the Tax Year 2010.
He was of the view that an addition of the Annexure "D" in the return to ask for details of assets purchased under the garb of personal expenditure is clearly showing the FBR has either no access to the data base regarding the sale and purchase of immovable & moveable property or they do not have the ability to use the data available. Instead of increasing the tax base this would mean to squeeze tax from those who are already in the tax net. This would also be like a duplication of details for those who are required to file the wealth statement with the return; ie, those who declare income more than Rs 500,000 or those falling into the presumptive tax regime and have tax deducted more than Rs 20,000.
Naved Andrabi added the department would now try to use this data to re-open the cases of those taxpayers who had filed the tax returns on the ground of not having sufficient sources to purchase the said asset or on the ground that the value declared, in their opinion, is too low when compared to the similar assets'' value in the market.
In any case those who are in the tax net would have taken care of white sources for the purchase of these assets and therefore, would end up into litigation with the tax authorities. This would fortify the views of the tax payers and the tax advisors that the hammer always falls on those who are in the tax net and not on those who deliberately avoid to stay outside the tax net, tax expert said. The return for the companies has no major change and is almost the same as that for the tax year 2009, he added.
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