Tax lawyers and experts have stressed upon the Federal Board of Revenue (FBR) to extend the scope of Voluntary Tax Compliance Scheme (VTCS) to banking transactions of all undeclared bank accounts of the filers and non-filers of income tax returns. It is learnt that the tax practitioners have reiterated their stance under the banner of All Pakistan Tax Bar Association before the FBR in a new presentation on the said scheme.
According to the association, the federal government has itself introduced concept of filer and non-filer in the scheme of Income Tax laws and penalized non-filers by imposing 0.6% advance tax on the banking transactions of non-filers against 0.3% advance tax on the banking transactions of filers with effect from July 2015. It looks that a Non-Filer, who does not file his return and forgoes his 0.6% advance tax, is discharged from payment of any further tax and is relieved from any further tax compliance. It is felt and considered final tax liability of a Non-Filer at the rate 0.6% Advance Tax is being discharged if such non-filer remains Non-Filer till the time he is not being caught by tax authorities. It is also discrimination among a Non-Filer who is traceable and a non-filer who is not traceable.
It is not an easy task for the FBR to probe into each and every bank account of non-filers and determine correct tax liability in each case due to huge number of non-filers and non-availability of information about nature of transactions. It is also a fact that every tax payer shall have recourse to Appellate as well as Superior Constitutional Forums which mean a non-ending litigation with those Non-Filers who are traceable to FBR. The non-filers who are not traceable shall have no tax implications against collection of 0.6% advance tax at the time of banking transactions which is again discrimination. Now the government is going to introduce VTCS for traders which shall mean that the traders will enjoy immunity from any probe of their banking transactions within a period of last 10 years prior to the year 2015 which is also discriminatory and may attract litigation by other segments of business community.
In order to avoid all these complications it is appropriate that the scope of VTCS may be extended up to banking transactions of all undeclared bank accounts of the Filers as well as non-filers. It is more practical that FBR indiscriminately offers all account holders to declare their undeclared accounts against payment of 0.1 to 0.6% tax on the banking transactions for the last 5years ie, from July 2009 to June 2014. If any person does not declare his transactions voluntarily, the FBR shall take information from the banks and collect such tax forcefully. Through this legislation, undue litigation may be avoided and a reasonable amount of revenue may also be collected without any undue hassle. It is also proposed that protection should be granted that Section 122(5) and 122(5A) of the Income Tax Ordinance, 2001 will not be invoked against declarations under this scheme, association added.
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