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ISLAMABAD: The Reforms and Resource Mobilisation Commission (RRMC) has recommended electricity/gas companies to collect sales tax/income tax data of original utility connection holders based on their computerised national identity cards (CNICs) numbers.

According to a recommendation of the RRMC, at present, more than 4 million industrial/commercial connections are being used whereas income tax/sales tax return filers in the category of commercial/industrial sectors is far less. Sales tax filers are hardly 100,000, out of which more than 50% are “Nil” filers.

Moreover, total income tax filers are 3.5 million including major filers earning only salary income. All industrial/commercial connections should be mapped with sales tax/income tax numbers. Utility companies be directed to gather sales tax/income tax data of utility connection holders on the basis of CNIC against which such electricity/gas connection has been issued. To broaden the tax base on the basis of readily and best available data, it added.

According to the Economic Survey (2020-21), as many as 129,541 commercial and industrial consumers of electricity and gas were registered with the FBR after issuance of over 650,000 notices based on data of the Discos and gas companies.

More than 650,000 notices have been issued on the basis of data obtained from the Discos and in lieu of these notices 129,541 returns have been enforced so far, it added.

FBR: Dwindling tax collection

In 2019, the idea to expand the tax base through utility data was originally launched by former FBR chairman Shabbar Zaidi. On October 15, 2019, former FBR chairman launched an aggressive drive from October 15, 2019 for the registration of all industrial and commercial consumers of electricity.

All industrial and commercial consumers of electricity are necessarily required to be registered for tax purposes. The FBR had been using persuasive modes operandi for the same. In order to achieve the desired results an aggressive drive was undertaken from October 15, 2019.

During a press conference of former FBR chairman on Oct 15, 2019, former chairman FBR had said that over 60,000 notices to non-registered/non-compliant industrial and commercial consumers in Faisalabad were jointly sent by the FBR and Faisalabad Electric Supply Company (Fesco).

Shabbar Zaidi had asked the Ministry of Power that any application for commercial/industrial connection of electricity/gas shall not be processed unless the applicant is registered under section 181AA of Income Tax Ordinance 2001. In this regard, the FBR sought Power Division’s support for implementation of section 181AA of Income Tax Ordinance.

The former chairman in his letter to Ministry of Power had sought its help for the implementation of Section 181AA of Income Tax Ordinance-2001 which specifically stipulates that any application for commercial or industrial connection of electricity or gas shall not be processed and such connection shall not be provided unless the person applying for electricity or gas connection is registered under the said section which pertains to filing of income tax returns.

Similarly, in 2018, the FBR had approached the electricity and gas companies for obtaining data of newly registered commercial and industrial consumers to bring them into the sales tax net. At that time, the board had issued instructions to the collectors of sales tax to find out potential taxpayers on the basis of information available with the electricity and gas distribution companies.

Sales tax collectors (now chief commissioners) had approached the Sui Southern Gas Company Limited (SSGC) and Sui Northern Gas Pipelines (SNGPL) for obtaining information including meter numbers, registration and other related data of industrial units.

The data was also obtained from registered units operating in the jurisdiction of Karachi Electric Supply Company (KESC), Hyderabad Electric Supply Company (Hesco), Faisalabad Electric Supply Company (Fesco), Lahore Electric Supply Company (Lesco), Multan Electric Power Company, Gujranwala Electric Power Company (Gepco) and Peshawar Electric Supply Company (Pesco).

Copyright Business Recorder, 2023

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