Direct taxes: FBR creates sizable demand of Rs491.03bn in 5 months

ISLAMABAD: The Federal Board of Revenue (FBR) has created sizable direct taxes demand of Rs 491.03 billion during the first five months of the current Financial Year 2021-22, against Rs 439.88 billion in the same period last year, registering an increase of 12 percent.

According to the data released by the FBR here on Wednesday, previously, coercive tax recovery measures including bank attachments were taken immediately on conclusion of statutory time of 30 days after issuance of assessment order.

However, in order to ensure harmony and calm in the business and industry and bridge trust deficit between citizen and the state, the FBR has issued instructions not to take coercive measures until the case has at least passed the test of first appeal, at least.

Due to these soft instructions, such decrease in collection from demand created is quite normal and this very aspect should not be ignored.

Second, the tax recovery process against the demand created is a long and tedious exercise and the FBR believes in the due process of law, while ensuring that every penny due towards taxpayers is collected in a transparent manner.

The institution believes that the worst revenue collection is the one, which weakens the relationship between the citizen and the state.

Third, this year the date for filing of tax return was 30th September 2021, which was further extended till 15th October 2021 due to extraordinary pressure created on the FBR’s IT system.

This placed return filing on track and led to realisation of maximum revenue collection in the earlier months in comparison with last year when due date for filing of return was 8th December 2020.

Likewise, the overall collection has increased manifold, which could cause a possible decrease, while drawing comparison with the same period last year.

Furthermore, it is pertinent to highlight that the new leadership of the FBR strongly believes in a culture of voluntary compliance and ease of doing business through digitisation, transparency, and minimum human contact between the FBR and the taxpayers.

Pursuing its new vision, the FBR has introduced a number of innovative interventions both at policy and operational level, which aim at maximising tax compliance through due process of law and non-coercive measures.

This is, indeed, a total paradigm shift, which is manifested in clean taxation by timely issuance of refunds, which has not only contributed significantly to ensuring the liquidity flow in the business but also bridged the trust deficit between the FBR and the taxpayers. The amount of refunds disbursed during July- November 2021 was Rs 123 billion compared to Rs 88 billion paid last year, showing an increase of 40.5 percent.

Likewise, Team FBR continues to create sizable judicious demand in direct taxes and during the first five months of the current Financial Year 2021-22, demand created stands at Rs 491.03 billion as against Rs 439.88 billion in the same period, last year, registering an increase of 12 percent.

However, the FBR is promoting its policy of due tax collection with not a penny received from taxpayers in advance. It believes that superior most revenue is the one that is collected without tinkering with business and industry and that is increasing in Pakistan due to a wide array of out of box measures taken by the FBR, which aim at facilitating taxpayers through a digitised, reliable, and transparent tax system.

Some of the key digital interventions made by the FBR include the launch of Track and Trace System on key sectors of Large Scale Manufacturing (LSM), Point of Sale System to digitally monitor the Tier-1 retailers, automation of processes and preparation of Single Sales Tax Portal.

The FBR is collecting bulk of its revenue through withholding taxes and at import stage to facilitate the taxpayers on the one hand and to minimise the cost of tax collection on the other.

Unlike in the past, these innovative interventions are increasing voluntary tax compliance and minimising harassment, coercion, and high handedness.

The above new vision enshrined in voluntary compliance and transparency is already showing its results through consistent revenue growth. While chasing a staggering revenue target of over Rs 5.8 trillion, the FBR has not only achieved the target fixed for the first five months of the current Financial Year (July-November) 2021-22, but has also collected Rs 304 billion in excess to the assigned revenue target for the period. This by all means is a monumental success, which can by no means be downplayed.

The FBR’s outstanding performance is being widely acclaimed by all including Prime Minister Imran Khan, who has been tweeting to acknowledge and appreciate the FBR on a regular basis.

Copyright Business Recorder, 2021