The Federal Board of Revenue has chalked out a new plan to increase revenue collection in the remaining five months (February-June) of 2010-11 by taking strict enforcement action against the withholding agents, who deduct taxes, but fail to deposit the same in the national exchequer.
Sources told Business Recorder here on Thursday that the decision has been taken in the first Board-in-Council meeting chaired by FBR Chairman Salman Siddiqui at the FBR House. The restructuring of the Inland Revenue has also been considered during the meeting to empower the Additional Commissioners of Inland Revenue under the functional level for separately dealing with enforcement, audit and legal areas of taxpayers. The new team of tax managers including FBR Member Inland Revenue Khawar Khurshid Butt and Asrar Raouf Additional Secretary, Revenue Division was also present in the meeting.
On the conclusion of Board-in-Council meeting, Minister of Finance Abdul Hafiz Sheikh visited the FBR Headquarters in the evening and met the FBR Chairman Salman Siddiqui. FBR Chairman also introduced the FBR Member Customs and FBR Member IR with the Finance Minister during the meeting.
Board-in-Council considered that the FBR in consultation with the Director General Withholding Tax would initiate action against all persons where withholding of taxes has been done, but the deducted amount has not been deposited in the national kitty. There are different forms of withholding of taxes where withholding agents have shown high level of non-compliance. It has been decided to strictly monitor this area and final action plan would be implemented after obtaining input from the Director General Withholding Tax in the next Board-in-Council meeting to be convened shortly. In the next 4-5 months, the withholding of taxes would be the key focus under the enforcement plan of the Board.
Under the re-organisational structure of the Inland Revenue, sources said that the Board-in-Council considered the proposals of the Additional Secretary Revenue Division. It has been proposed that the functional level should be transferred to the Additional Commissioners of Inland Revenue. Under the proposed structure, every Commissioner of Inland Revenue would be fully equipped with the Additional Commissioners for dealing with the issues of Audit, Enforcement and legal. As per proposal, each Commissioner of Inland Revenue would have a complete setup of Audit, Enforcement and Legal.
According to the proposal, the existing setup of Commissioner Legal, Commissioner Enforcement and Commissioner Audit under the Chief Commissioner may be abolished. The Commissioner of Inland Revenue would be assisted by Additional Commissioner Audit, Additional Commissioner Enforcement and Additional Commissioner Legal. These three Additional Commissioners would directly report to the concerned Commissioner of the RTO. These Additional Commissioners would work directly under the supervision of the Commissioner IR. In this way, the audit, enforcement and legal maters of a specific unit would be simultaneously deal by the concerned Commissioner. Under the new setup, each Commissioner would have full information about the audit, enforcement and legal related issues of a taxpayer through the respective Additional Commissioner Audit, Additional Commissioner Enforcement and Additional Commissioner Legal. The new setup seemed to be close to the old circle-based system where all functions were separately performed by the income tax officials. Under the proposed restructuring, the functions of IT and Human Resource Management (HRM) would continue to directly report to the Chief Commissioner Inland Revenue of the concerned RTO.
If a Commissioner Inland Revenue has been empowered to deal with 10,000 cases, he would be responsible for handling all audit, enforcement and legal issues of these taxpayers through their respective Additional Commissioner Audit, Additional Commissioner Enforcement and Additional Commissioner Legal.
Under the new structure of the Board, the FBR is expected to create new posts of Chief-I, Chief-II and Chief-III to directly interact pertaining to operations with the Commissioners Inland Revenue in the field formations. The new setup of Chief-I, Chief-II and Chief-III would operate within the FBR Member IR empowered to handle all domestic taxes including sales tax, income tax and federal excise duty. The new setup of Chief-I, Chief-II and Chief-III is likely to replace to abolished posts of FBR Member Domestic Operations North and South.
Sources stated that the FBR discussed various options to increase revenue collection in the remaining months of current fiscal. The FBR Members gave different suggestions to improve revenue collection. It was agreed to focus on recovery of arrears and expedite pending cases at the level of judicial fora including Tribunals, High Court and Supreme Court of Pakistan. It has been further decided that strict monitoring and enforcement of sales tax is very important for increasing revenue collection.
The Board-in-Council also decided to take action against over 10 lakh non-filers of income tax returns under the Income Tax Ordinance 2001. The FBR has decided to give monthly targets to the Regional Tax Offices (RTOs) to enforce filing of returns. This would not only result in broadening the tax-base, but also be instrumental in improving revenue collection.
The Board-in-Council also decided to take action against around 40,000 non-compliant withholding agents who have failed to file their returns or statements. The FBR will assign targets to the field formations and failure would result in action against the concerned officials in the RTOs. The FBR has also decided to take action against the non-filers of sales tax return (December 2010), who failed to file returns in January 2011. The FBR will issue e-intimations to the non-filers for legal action against them by the respective RTO.
Sources said that the Board-in-Council meeting chaired by FBR Chairman Salman Siddiqui showed its commitment to reach the original budgetary revenue collection target of Rs 1667 billion. It has been committed to surpass the downward revised revenue collection target of Rs 1604 billion and efforts would be made to achieve the original target of Rs 1667 billion for 2010-2011.
During Board-in-Council meeting, FBR Member Legal gave an in-depth analysis on the restructuring of the Legal Wing. The presentation focused on problems in dealing with different issues under the existing structure of the Legal Wing of the FBR. It has been proposed to equip the legal Wing with two FBR Chief Legal to exclusively deal with the cases of the Federal Tax Ombudsman (FTO) and other cases at the level of courts. In the absence of necessary workforce under the FBR Legal Wing, the department is facing problems in effectively dealing with the legal issues. In case FBR will provide Chief Legal to the Wing, Secretaries and Second Secretaries would also be provided to the FBR Legal Wing for proper working of the Board.
The Board-in-Council also appointed Riffat Shaheen Qazi, Member Facilitation and Taxpayer Education (FATE) of FBR as official spokesperson of the FBR. At the same time, the FBR has also appointed Asrar Raouf Additional Secretary, Revenue Division as official spokesman of Revenue Division. The Boar-in-Council also authorised the FBR Member IR and FBR Member Customs to interact with the media in relation to the respective field/area.
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