Tax Laws (Third Amendment) Ordinance, 2021: 7 new measures introduced to broaden tax base

ISLAMABAD: The government has introduced seven new measures for broadening the tax base through the Tax Laws (Third Amendment) Ordinance, 2021.

Under new Section 114B of the Income Tax Ordinance 2001, the Board shall have the powers to issue income tax general order in respect of persons who are not appearing on the ATL but are liable to file return under the provisions of this Ordinance. The income tax general order may entail consequences for the persons mentioned therein: Disabling of mobile phones or mobile phone SIMs; discontinuance of electricity connection; and discontinuance of gas connection.

The board or the commissioner having jurisdiction over the person mentioned in the income tax general order may order restoration of mobile phones, mobile phone SMS and connections of electricity and gas, in cases where he is satisfied that the return has been filed; or person was not liable to file return under the provisions of this Ordinance.

No person shall be included in the general order unless following conditions have been met with: Notice under sub-section (4) of section 114 has been issued; date of compliance of the notice under sub-section (4) of section 114 has elapsed and the person has not filed the return. The action under this section shall not preclude any other action provided under the provisions of this Ordinance.

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According to the Tax Laws (Third Amendment) Ordinance, 2021, the powers have been obtained by the FBR to discontinue gas and electricity connections of persons including tier-1 retailers, who are either not registered or if registered not integrated in terms of section 3(9A).

Second, the government has increased amount of penalty for tier-1 retailers, who are not integrated in terms of section 3(9A)

Third, powers have been given to the FBR discontinue gas and electricity connections of persons including tier-1 retailers who are either not registered or if registered not integrated in terms of section 3(9A).

Fourth, the government has increased amount of penalty for tier-1 retailers, who are not integrated in terms of section 3(9A).

Fifth, the FBR has enhanced Extra Tax rates on industrial and commercial gas and electricity connections to persons, who are unregistered (Amendment in SRO 509(I)/2013, dated 12.06.2013).

Sixth, the government has included "steel" sector in clause 24D to provide a reduced rate of minimum turnover tax to distributors, dealers, sub dealers, wholesalers and retailers at par with cement sector.

Seventh, powers have been given to the FBR to disable mobile phones/SIMs, disconnect electricity and gas of persons who are required to file returns.

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Eight, the NADRA will share data with FBR for broadening of tax base, calculating indicative income and identifying potential tax evasion.

The FBR has also introduced an enabling provision for making facilitator of online market place as withholding agent under Eleventh Schedule to the Sales Tax Act, 1990

According to the Tax Laws (Third Amendment) Ordinance, 2021, in case of the online market place facilitating the sale of third-party goods, the liability to withhold tax on taxable supplies of such party at the rates specified in the Eleventh Schedule to this Act, shall be on the operator of such market place.

Copyright Business Recorder, 2021