Undisclosed assets legalisation: FBR empowered to offer amnesty scheme

The Federal Board of Revenue is legally empowered to offer amnesty scheme for the legalisation of the undisclosed assets and income as and when required by the government under section 120A of the Income Tax Ordinance 2001. Tax experts told Business Recorder here on Friday that section 120A was incorporated in the Ordinance through Finance Act 2008.
Under section 120A, the Board may introduce a scheme of payment of investment tax in respect of undisclosed income, representing any amount or investment made in movable or immovable assets. Where any person declares undisclosed income in accordance with the scheme and the rules, the tax on such income called investment tax shall be charged at such rate as may be prescribed.
Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has strongly proposed announcement of general amnesty scheme for the legalisation of the un-disclosed assets and income by the local investors in the upcoming budget (2012-13) on the pattern of amnesty granted to the stock exchanges. The value of legalisation of undisclosed assets should be one percent.
Sources said that the FPCCI has submitted the proposals to the policy makers for next fiscal 2012-13. According to the proposals, an Amnesty Scheme for local investors has been proposed in the coming budget. FPCCI welcomes the recent announcement of amnesty for stock exchanges similar scheme may be extended to the business community at large, as provided in section 120A of the Income Tax Ordinance. Under section 120A, the Board may make a scheme of payment of investment tax in respect of undisclosed income, representing any amount or investment made in movable or immovable assets.
FPCCI suggested general amnesty to others if it shall have positive effects for documentation of economy and broadening the tax-base. Provided that the tax rates are reasonable and should not exceed 1% of the value declared. Proper advertisements to be given in Print and Electronic media. The FBR should elongated time period may be given to avail the opportunity i.e. tax rates may be linked with timings i.e. prior and post June 30 and there should be no restriction on any kind and type of assets to be declared including foreign assets.