The Central Board of Revenue (CBR) will bring the undocumented economy into the tax net with the help of a databank containing information collected from various external sources including banks.
CBR Chairman M Abdullah Yusuf told the Senate Standing Committee on Finance on Tuesday that the professional service providers like doctors and engineers were out of the tax net. There are a lot of undocumented sectors, which need to be brought under the tax net.
The CBR is evolving a computerised system to compile a databank for obtaining necessary information from cash withdrawal from banks, utility agencies, foreign travel and other sources. In past, adhoc arrangements failed to bring the potential sectors into the tax net.
He said that the databank would play an important role to control short-filing of sales tax and tax evasion. Particularly, systems would check and take actions instead of individuals using data available with the databank.
He said that the rate of capital value tax (CVT) on stock market transactions were doubled in the previous budget, but the revenue collection from this head did not improve. The doubling of CVT reduced the volumes of buying/selling of shares' transactions in the stock market.
When asked why the Federal Board of Revenue Act 2007 was made part of the Finance Bill, CBR chairman said that it was the government decision and not the CBR's move. The FBR Act has been incorporated in the Finance Bill on the advice of the government.One of the senators said that the government wanted to promote construction sector, but increase in sales tax on iron and steel items has increased the steel prices.
The committee agreed that there is a need of mid-term review of budget to see the financial implications of the taxation/relief measures announced in budget 2007-2008. During the meeting, the CBR chairman also highlighted the contribution of international audit expert from USA in the national audit plan.
Senator Haroon Akhtar Khan appreciated personal efforts of CBR chairman in speedy implementation of reforms and said: "You have done a great job and an extraordinary change has been witnessed in the CBR".
Adviser to the Prime Minister on Finance Dr Salman Shah; Minister for State on Finance Omer Ayub and other senior officials of the Ministry of Finance attended the meeting.