The Federal Board of Revenue (FBR) has introduced special provisions for persons not appearing on Active Taxpayers List (ATL) through Finance Bill 2019 and abolished the term of non-filer from the statute. Presently, the law provides for the concept of a non-filer and stipulates higher withholding rates for the same, which are adjustable at the time of filing of income tax return.
The FBR said that this tax regime has created a misconception that a non-filer can go scot-free by choosing not to file income tax return. The measure was meant to increase the number of filers, however over time the focus shifted to raising additional revenue only. The measure has not achieved the desired results as the present regime does not provide any legal framework to ensure filing of return by such non-filers.
In order to remove the aforesaid misconception, the concept and the term of "non-filer" is being abolished from the statute, wherever occurring. In its stead, a separate Schedule is being introduced to specifically provide a legal framework for punitive measures for persons not appearing on ATL and to ensure filing of return by such persons.
The main attributes of this scheme is that the persons whose names are not appearing on the ATL will be subjected to hundred percent increased rate of tax. The withholding agents will clearly specify the names, CNIC or any other identification of such persons in the withholding statement so that legal provisions to enforce return can come into effect. Where a withholding agent is of the opinion that hundred percent increased tax is not required to be collected on the basis that the person was not required to file return, the withholding agent shall furnish an intimation to the commissioner setting out the basis on which the person is not required to file return.
The commissioner shall accept or reject the contention on the basis of existing law. In case the commissioner fails to respond within thirty days, permission shall be deemed to be granted to not deduct tax at hundred percent increased rate.
Where the person's tax has been deducted or collected at hundred percent increased rate and the person fails to file return of income for the year for which tax was deducted, the commissioner shall make a provisional assessment within sixty days of the due date for filing of return by imputing income so that tax on imputed income is equal to the hundred percent increased tax deducted or collected from such person and the imputed income shall be treated as concealed income.
The provisional assessment shall be of no effect if the person files return within 45 days of completion of provisional assessment and the provisions of the ordinance shall apply accordingly. Where return is not filed within 45 days of provisional assessment, it shall be treated as final assessment and the commissioner shall initiate penalty proceedings for concealment of income, the FBR added.
Comments
Comments are closed.