Importers, big industries: FBR takes seven major decisions to verify exemption certificates

The Federal Board of Revenue (FBR) Wednesday took seven major decisions to check the authenticity of the exemption certificates obtained by the business community to verify all certificates obtained by importers, leading industries and sectors enjoying exemptions.
Sources told Business Recorder here on Wednesday that the revenue collection is expected to increase in 2014-15 through enforcement of these key decisions by the FBR. The decisions have been taken on the direction of FBR Chairman Tariq Bajwa based on "Study of Business Rules for Monitoring of Withholding Tax Functions". , Presentation on exemption certificate issued was made by a senior tax official to FBR Chairman. The FBR has taken the following decisions to check the status of exemption certificates obtained by the business and trade:
Firstly, all sales tax registered persons are now Withholding Agents. In a bid to effectively enforce withholding statements under section 165 of the Income Tax Ordinance 2001, it may be examined whether Withholding Agents who are e-enrolled but not filing Withholding statements under section 165 of Income Tax Ordinance, 2001 can be put to Active Taxpayer List (ATL) of sales tax. The FBR has directed Member (IR-Operations), Member (Legal) and Member (IT) for immediate action. Secondly, exemption certificates issued under section 148 (2013-2014) may be scrutinised with the help of sales tax record (Top 10 cases) to identify the gaps, deficiencies between purchases shown in their sales tax returns vis-à-vis income tax returns. The action would be taken by Member (IR-Operations).
Thirdly, the information about industrial input/output ratios may be obtained from FBR's Input Output Coefficient Organisation (IOCO) in respect of major sectors enjoying exemption certificate under section 148 of the Income Tax Ordinance to ascertain production benchmarks which may be applied while allowing Exemption Certificates and also to be applied to know the production for the purposes of sales tax payment. The FBR has directed Member (IR-Operations) for necessary action in this regard.
Fourthly, exemption certificates u/s 148 need to be fully automated (including one customs) along with incorporation of condition contained in SRO 717/14 dated 07.08.2014. Efforts to be initiated to issue certificate under section 153 of the Income Tax Ordinance 2001 online. The action will be taken by Member (IR-Operations) and Member (IT). Fifthly, application of Rule 44(2) read with Part VIII of First Schedule to Income Tax Rules, 2002 would be strictly monitored by field formations for which necessary instructions be issued. The action would be taken by Member (IR-Operations).
Sixthly, revenue impact of exemption (section wise) certificates issued would be calculated to workout the actual figure of exemptions granted through these certificates. The action would be taken by FBR Member (IR-Operations) and Member Information Technology.
Seventh, the issue of allowing exemption certificates under section 148 with reference to tax credits under section 65 D may be examined in the light of various superior courts judgements and amended provision of Section 159 of Income Tax Ordinance, 2001. The FBR has directed Member (IR-Policy) and Member (Legal) for necessary action, they added.