The Federal Board of Revenue (FBR) has launched an enforcement campaign to ensure filing of income tax returns by businessmen falling within the category of "non-salary cases" for expanding the tax base. The non-salary cases cover wide categories of businessmen including individuals, associations of persons (AOPs), shop keepers, manufacturing units, trading units, contractors, doctors, lawyers, engineers, transporters and various other categories of non-salaried cases.
The exercise would also bring buyers/sellers of property and purchasers of expensive new cars into the tax net. In this regard, the FBR issued instructions to field formations on Monday. The FBR has taken the decision in the light of the high priority given to enforcement of income tax returns in non-salary cases. The board has conveyed to the Directors-General of all Regional Tax Offices (RTOs) to constitute dedicated team of officers to spearhead the campaign for persuading the non-filers to file income tax returns for the "Tax Year 2008".
The permission letters to the teams will be issued by the concerned commissioners holding charge of the broadening of tax base. The commissioners will also be responsible for supervision and monitoring of the campaign. The FBR has also directed the RTOs to assign the teams running campaign geographical areas of their operation within the respective RTOs.
The officials have also been advised to ensure transparency and commitment during the campaign, while those showing excellent results have been promised rewards under the Unified Reward Rules. The results of the campaign will be intimated by the RTOs to the Board on the last working day of every week, the FBR added.
Sources said that the purpose of the exercise is to bring new taxpayers into the tax net. The field formations would issue notices to persons under section 114 of the Income Tax Ordinance 2001 for filing of returns. In case returns are being filed, the same would be accepted under the Universal Self-Assessment Scheme (USAS). If there is no response to the notices, the department is legally empowered to further proceed against the taxpayers under relevant provisions of the Income Tax Ordinance 2001.
One of the ways to bring non-salary cases into the tax net is to issue notices to the shopkeepers and retail outlets located in various plazas/business centres in posh areas. The capital value tax (CVT) data collected from the provincial registrars of property would help to discover potential buyers and sellers of property.
The source of investment in real estate sector could be asked on the basis of data collected in the real estate sector. Secondly, the department would also issue notices to the purchasers of new cars taking into account data collected from the motor vehicle dealers and registration authorities. In case of insurance companies, the department would check whether insurance agent to whom commission has been paid has filed the return.
When contacted, Ali Rahim, a leading tax lawyer and president of Karachi Tax Bar Association, told Business Recorder that larger tax base would ensure levy of minimum tax rates on the general masses. The broadening of tax base exercise would bring non-salaried cases into the tax net. A major portion of the un-documented sector is covered within the definition of non-salaried cases. Once the tax base is broadened, the burden of taxes on salaried class, where tax is deducted at source, would also reduce, he added.