The World Bank (WB) has conveyed to the Federal Board of Revenue (FBR) that filing of income tax returns under the Universal Self-Assessment Scheme (USAS) has not resulted in any revenue loss on the direct taxes side. Sources told Business Recorder on Saturday that the performance of Direct Taxes Wing has shown major improvements over the past three years.
The WB was of the view that positive results were visible on promulgation of the Income Tax Ordinance, 2001, which became effective in 2003. Its major feature was the introduction of Universal Self-Assessment Scheme. Against apprehensions, the USAS did not lead to loss of revenue. This means that apprehensions about misuse of the scheme seemed to be incorrect, the Bank added.
In 2007, the returns filed through USAS stood at double the amount of 2006 (Rs 48 billion against Rs 24 billion). The collection of direct taxes showed a twofold increase in just three years ie to Rs 331 billion in 2007 from Rs 165 billion in 2004.
A significant feature of 2007 performance was that the share of direct taxes in gross taxes had increased from 32 percent to 40 percent. Resultantly, direct taxes had the largest share of contribution in the overall taxes collected. The number of tax return filers showed a considerable increase over the years ie 1.8 million in 2006-07 against 1.03 million in 2004-05.
The WB said that serious effort had been made in bringing down the refund claims by issuing refunds. Over the past three years, about Rs 30 billion refunds were settled every year. As a result, the outstanding refund claims stood at Rs 7 billion at end of 2006-07.
Third-party information is an important factor in the expansion of tax base, and steps had been taken in this direction by in-house development of the software, called 'Nexus'.
It said that since the last mission, there was considerable progress in implementation of the Tax Management System (TMS). The first release of the revised TMS, with partial functionality (profiling, including record management and exemption certificate processing) which was to be installed by June 2007, was done at different RTOs. A fully functional TMS, including profiling, withholding, return/payment filing, rectification, refunds, audit, and legal tracking is scheduled to be operational by 2007 to process the tax year 2007 returns, the WB added.