Voluntary tax payments emerge as a leading source of revenue

The FBR had received Rs 196.7 billion as voluntary tax payments along with the income tax returns during 2010-11, against Rs 165.8 billion in the same period of previous year, reflecting an increase of 18.3 percent
According to report issued here on Tuesday the Voluntary Payments (VP) include: payments with return and advances, Rs 196.7 billion have been generated during FY: 10-11 as compared to Rs 165.8 billion in the corresponding period last year, 18.3 percent growth has been witnessed in collection from this important component. It may be recalled that till fiscal year 2006-2007 since implementation of universal self-assessment scheme (), Voluntary Payments emerged as a leading source of revenue superseding the withholding tax which is traditionally the major revenue source of income tax.
However, the voluntary compliance did not maintain its first position for long. Since 2007-2008 this important source of revenue is on decline to date mainly due to non effective audits by the department. It may be highlighted that effective audit and punitive action against tax defaulters are the only effective tools with the tax department.
Various studies have indicated that voluntary compliance is independent in nature; it is not influenced by the type of governments in place; in fact, VP is ensured by audit and punitive actions. Major component of voluntary payment is advance tax where a sum of Rs 184.2 billion was collected in 2010-11 against Rs 156.3 billion in FY 09-10. The second component of VP is payment with returns, which increased significantly during the period under review. During FY 10-11 Rs 11.8 billion were collected against Rs 9.5 billion in FY 09-10, indicating a growth of 24.8 percent.