The newly established "Survey and Collation Wings" for broadening the tax base at Regional Tax Offices (RTOs) have no legal backing to conduct physical survey of posh markets, retail outlets and business centres under the Income Tax Ordinance 2001.
Experts told Business Recorder on Thursday that the Income Tax Ordinance 2001 has no legal provision to empower the income tax officials for carrying out physical survey of markets, retailers and big chain stores etc. The income tax officials of the "Survey and Collation Wings" can verify data from various sources, but they cannot conduct survey to check records/turnover at the retail shops.
Sources said that the only way to broaden the tax base is to conduct physical survey of retail outlets and modern business establishments. In 2000-2001, National Tax Survey (NTS) was conducted to collect additional revenue of around Rs 100 billion for which a command and control centre was established at the Army Aviation headquarters to watch and regulate the whole process.
At that time, total number of retailers was nearly 1.2 million which, could have been raised up to 2.5 million in view of developments and business expansions of plazas/shops during the last few years.
Tax experts opined that all kinds of schemes and verification exercises have failed to bring retailers into the tax net. The field formations tried to broaden the tax base on the basis of natural gas connections and power consumption data, but large number of retailers are still out of the tax net.
The board had announced a lucrative scheme for retailers and traders in budget 2007-2008 to document the entire retail sector. Despite nominal amount of tax, the scheme failed to attract retailers. Another option is to use the "Electronic Tax Register (ETR)" at big retail outlets to document business transactions on daily basis.
This ETR scheme is difficult to be implemented due to absence of mechanism for online backup of transactions being carried out at the retail outlets. Each transaction at the ETR must be electronically transmitted to the regional tax office or FBR/LTU/RTO etc for prompt documentation of transactions. Otherwise, it is impossible to control tempering of data by the retailers and traders. Without a foolproof system, there would be no authenticity of the ETR to be maintained by the big outlets.
Now, the only option left for the tax authorities is to resume physical survey of retailers and traders. Experts added that if the salaried individuals were excluded from the overall return filers, the number of actual income tax return filers would drastically come down.