SATURDAY JANUARY 15: FBR has unique powers under IT law: Magic wand to obtain tax-related data

ISLAMABAD: The Federal Board of Revenue (FBR) has unique powers under the Income Tax Ordinance 2001 to obtain information of citizens from any government department, including National Database and Registration Authority (Nadra), and to check their sources of income and expenditure.
A senior FBR official told Business Recorder here on Friday that section 176 of the Income Tax Ordinance 2001 gives legal powers to obtain any kind of information from government departments even if their respective laws restrict disclosure of information.
The section 176 is related to the notice to obtain information or evidence from any person or government department. Through a simple notice to the government department under section 176 of the Income Tax Ordinance 201, the FBR can seek information about the citizens for tax purposes, if required.
The authority of the officials of Inland Revenue under section 176 of the Ordinance 2001 is enough to obtain any kind of data from government departments for broadening the tax base. Even if the law of any government department does not permit to give information under its law, the FBR can issue a notice to such department under section 176 of the Ordinance 2001 for seeking information about the citizens.
Due to lack of enforcement, the FBR remained unable to fully utilise this unique power of the Income Tax Ordinance 2001 to collect data from government departments. If the law of any regulatory body or department does not allow sharing of information, the FBR can seek such information from the authority under the relevant provisions of the Income Tax Ordinance 2001, which emperors the Board to collect such data.
On the other hand, Federal Board of Revenue Act 2007 also empowers tax authorities to access data of any government organisation and obtain information pertaining to the taxpayers.
Responding to a question on obtaining data from Nadra, the official opined that the FBR is ready to give fee, like Rs 15, per Computerised National Identity Card Number (CNIC) or National Tax Number (NTN) to the authority for seeking information about citizens. In this regard, the FBR and the authority are convening meetings. However, the income tax law is very clear on the issue for obtaining information from the authority.
Under the existing arrangement, the FBR is already verifying the CNICs from the authority before issuance of the NTN to a new taxpayer. According to sources, the scope of section 176 of the Ordinance 2001 is wide, but so far the powers have not been fully invoked by the tax department. If the FBR fully invokes powers of section 176, the tax department can easily obtain information from regulatory authorities like Oil and Gas Regulatory Authority (Ogra), National Electric Power Regulatory Authority (Nepra) and gas companies, etc.
The powers of the FBR under section 176 could be judged from the fact that the FBR can obtain free of cost information about any person within the limits of the said provision of the law.
Referring to section 176, sources said that the provision clearly talks about the notice to obtain information or evidence. Under the section, the Commissioner may, by notice in writing, require any person, whether or not liable for tax under Income Tax Ordinance 2001 to furnish to the Commissioner or an authorised officer, any information relevant to any tax as specified in the notice. The Commissioner or authorised officer may require the persons examined to produce any accounts, documents, or computer-stored information in the control of the person.
Quoting section 80 of the Income Tax Ordinance 2001, sources said the definition of person covers an individual, a company or association of persons, federal government, a foreign government, a political subdivision of a foreign government, or public international organisation.
For the purposes of this Ordinance, 'company' means a company as defined in the Companies Ordinance; a body corporate formed by or under any law in force in Pakistan; a modaraba; a body incorporated by or under the law of a country outside Pakistan relating to incorporation of companies; a trust, a co-operative society or a finance society; a foreign association, provincial government; local government; small company; firm; trust and unit trust as defined in the Ordinance 2001.
Last year, the Revenue Advisory Council of the FBR had identified various sources of information for broadening the tax base using third-party data as well as Nadra data. The RAC had estimated to bring 700,000 rich people into the tax net on the basis of detailed information to be provided by the Nadra. In the early meetings of the RAC, sources said, the Ministry of Finance and Revenue Advisory Council had directed the FBR to monthly register 100,000 new cases on the basis of national data available with the Nadra and other external sources. The availability of detailed information about the rich class would help the FBR to register 700,000 rich people into the tax net. The combination of third party information and national data of Nadra would ultimately bring these 700,000 rich people into the tax net.
However, the FBR's exercise to bring such 700,000 rich people has yet not been completed. Even the FBR is still unable to enforce filing of returns from all NTN holders, who are required to file their income tax returns.