The Central Board of Revenue (CBR) will issue totally revamped reward rules for customs, sales tax and central excise officials on the basis of going reforms, best tax practices in other countries and recommendations of international donors and Federal Tax Ombudsman (FTO).
Official sources told Business Recorder here on Tuesday that the proposed Income Tax Reward Order 2004' and 'Income Tax Informer's Rewards Rules' were not in line with the ongoing reform process particularly Universal Self Assessment Scheme (USAS) and Customs Administrative Reforms Project (CARE).
Both the 'reward order' and 'informer order' could be termed as old wine in the new bottle, which may face implementation problem after reformation of tax machinery.
The tax authorities want conceptual change in the existing reward rules and have asked the concerned officials to study the reward mechanism in vogue in other countries.
Officials said that international donor agencies have reservations pertaining to existing reward system and have recommended a system in line with the reform process. Officials said that every member has his own specific job description and new reward system would take into account this aspect as well.
They said that only a selected percentage of cases could be selected for audit under USAS, which would reduce the possibility of re-opening assessments. Similarly, the discretion of tax officials would be reduced after implementation of CARE project.
Thus the overall percentage of rewards would automatically reduce due to implementation of USAS as it would eliminate chances of fraud.
The reward rules have to be devised taking into account the concept of universal self-assessment on the income tax, sales tax, customs and central excise sides.
Recently, the Board in Council reviewed uniform reward rules for tax officials. It was noted that the new rules should only be notified after bringing conceptual change.
The income tax reward procedure is different from the 'Income Tax Informer's Rewards Rules', as the former is exclusively drafted for giving reward to the tax officials, while the latter deal with the external informers assisting the department in detecting evasion.
The CBR has drafted new procedure for rewarding the informers helping in unearthing evasion of income tax in the form of un-disclosed assets, income, expenditure and liabilities under the Income Tax Informer's Rewards Order 2004.
Under the proposed rules, the CBR has decided to give 20 percent of the total amount of tax evasion detection to the tax officials under the 'Income Tax Reward Order 2004'.
The CBR is also considering reward of minimum six months salaries to tax officials helping in surpassing the revenue targets. The rewards will be given to income tax officials who pass orders against the defaulting withholding tax agents.