The Federal Board of Revenue would utilise information of credit cards to check the actual sales at large retail stores and outlets in posh areas across the country to document transactions/turnover of retail shops under 'broadening the tax base plan' for 2010-11.
Sources told Business Recorder here on Monday that the FBR top sales tax official and Member/Value Added Tax/Sales Tax Abrar Ahmed has made recommendations in the FBR board-in-council meeting to broaden the tax base and enhancing both the direct and indirect taxes collection for achieving quarterly revenue collection targets fixed for the field formations. FBR Member ST submitted detailed proposals for documentation of the economy taking into account highest level of non-compliance by the most potential sectors.
Abrar Ahmed Member Sales Tax apprised the board-in-council about the proposals for enhancing the revenue collection during 2010-2011. Firstly, it has been proposed to conduct desk-audit based on information provided by the taxpayers.
The detections made through the desk-audit would help in increasing revenue collection. Secondly, recovery proceedings would be initiated only after the finalisation of the demands on the basis of Inland Revenue Appellate tribunal (IRAT) decisions thereby enhancing the taxpayer's confidence. In this way, revenue would be increased without giving any negative message to the registered taxpayers. Thirdly, information of credit cards would be used for detecting and tracing actual sales of large retail stores.
The enforcement divisions in each Large Taxpayer Unit and Regional Tax Office may take action on the proposal to check transactions taking place through credit cards at the retail outlets. The use of credit cards is extensive in big retail shops in posh areas where such transactions have not been reported to the tax department for determining their actual turnover.
The credit cards data would not only unearth the potential purchasers at such shops, but also check the actual turnover of retailers. If the FBR succeeds in successfully implementing the plan, it would be a major move to document sales/purchases made by elite class and determining actual sales.
However, the proposal could only be implemented at retail outlets having such credit card facility as many retailers have already refused to install Electronic Cash Registers to document their sales. Despite the fact the FBR is ready to offer free of cost Electronic Cash Registers at federal capital, retailers are reluctant to install such machines at their retail outlets. Fourthly, the information retrieved from major data sources like property, vehicles manufacturers and electricity bills would be effectively utilised as a measure of enhancing tax revenues. In this connection, the FBR would specifically focus on the hotels, restaurants sectors where many restaurants are still not properly maintaining record for the tax department to avoid payment of sales tax.
Board-in-Council convened detailed discussion on the proposals of Abrar Ahmed and it was decided that Member Sales Tax would make a detailed presentation on all these proposals before the Tax Reform Group constituted and headed by Federal Finance and Revenue Minister, sources added.