Voluntary Tax Compliance Scheme: FBR succeeds to document Rs52bn untaxed working capital

Federal Board of Revenue (FBR) has succeeded to document Rs 52 billion untaxed working capital under Voluntary Tax Compliance Scheme (VTCS); it was learnt here on Tuesday. Talking to Business Recorder, the FBR official, who did not want to be named, said that the board on the requests of the traders has now decided to extend the deadline of filing of returns under the VTCS till March 31, 2016.
Replying to a question, he said that the FBR had so far received some 5257 returns of non-filers and generated revenue to the tune of Rs 520 million under the VTCS.
Moreover, he said that although the FBR was expecting to receive 100 thousand returns under this scheme, they had so far succeeded to bring Rs 52 billion untaxed working capital into documented economy.
On the other hand, sources said that the FBR was still unable to attract substantial number of traders for the scheme, adding that the traders despite having 16 more days to avail the scheme have appeared reticent to opting the VTCS, following their past experiences with tax department. Resultantly, the board despite claiming that this scheme is traders'' scheme has so far received not more than 5300 returns across the country.
Similarly, the tax experts opined that this scheme could not yield fruits for the FBR until the section 111(4) of Income Tax Ordinance 2001 would not be omitted. They said that section 111(4) of the Ordinance had restricted the tax authorities for seeking explanation to any amount of foreign exchange remitted from outside Pakistan through normal banking channels that is encashed into rupees by a scheduled bank and a certificate from such bank is produced to that effect.
Moreover, tax experts said that traders would enjoy the VTCS benefits only for four years and then they would be charged under normal tax regime. Therefore, the VTCS remains feckless to attract a large number of traders so far.
Replying to a question, sources said that traders under section 111(4) of the Ordinance could easily whiten their income by paying 1.5 per cent to the Hawala Hundi operators. Tax experts further said that if the government had omitted said section then traders had no option but to enroll their businesses into tax net.