The Federal Board of Revenue on Saturday informed Finance Minister Dr Abdul Hafeez Shaikh that the Board has transmitted vital information about 16,000-17,000 rich people to the field formations for expanding the tax net and more information would be dispatched on a regular basis to the Regional Tax Offices (RTOs) to document elite class operating out of the tax net.
Sources told Business Recorder here on Saturday that the FBR team of tax managers gave a detailed presentation on the broadening the tax base and recent developments on issuance of notices to the potential persons with the help of Nadra database to the finance minister. Hafeez Shaikh chaired the second meeting of Broadening Tax Base, in the ministry of finance, FBR Chairman Salman Siddique, members and other officials of Inland Revenue were also present.
According to sources, latest cases of 9,300 persons have been dispatched to the Regional Tax Office (RTO) of Lahore and another 7,000 cases are being dispatched to other RTOs for necessary action. In most of these cases, the information obtained from immigration department revealed that the persons have frequently travelled abroad. Secondly, they have opened several foreign bank accounts and owe properties in posh areas of different cities.
The authentic data would help in documentation of these persons. The data transmitted to the field formations from time to time showed that around 16,000-17,000 most potential persons would be documented in the presence of authentic data of Nadra. It is expected that initially 16,000-17,000 persons would fall under the higher tax slabs of the Income Tax Ordinance and liable to pay substantial amount of taxes.
The FBR has further informed the ministry of finance that the major development would take place in the next few days and more data would be dispatched to the field formations. The potential persons would be brought on the tax roll of FBR. However, it seemed to be practically an uphill task to dispatch notices to 7 lakh undocumented persons simultaneously, sources added.
On the issue of non-filers, sources said that the finance minister asked the tax managers to explain the reason behind the slow progress of the tax department for not vigorously following the non-filers of income tax returns. It was informed to the minister that at present some 2.7 million persons are born on NTN and out of which some 1.7 million have filed their income tax returns and over 1 million despite having NTN have not bothered to file their income tax return.
The minister was surprised to know that there are 2.7 million National Tax Number (NTN) holders in the country and only 1.7 million are filing their income tax returns and only few hundred thousand are actually paying tax. Sources said that a large number of persons have obtained National Tax Numbers for purchasing vehicles.
As no payment of fee is involved for obtaining new NTN, a large number of NTNs have been obtained to fulfil a legal formality to purchase cars. In other cases, many persons have obtained NTNs many years ago and now not doing any business or job. Similarly, may persons have gone abroad, but they had obtained the NTNs in the past years.
Official sources informed that FBR officials tried to explain reasons behind such huge gap between the NTN holders and actual return filers. The minister asked the FBR to devise a mechanism for minimising the gap between the number of NTN holders and the actual taxpayers.
He asked FBR to constitute a special team of selected officers and staff to process the devised mechanism and assured in this regard of full co-operation not only from his ministry but by any other governmental organisation including the Nadra.
During the meeting it was observed that all NTN holders are not tax filers, and NTN, were required for every citizen only where there is a financial transactions is done. The minister also asked them to have a blue print of the success of this ongoing process of netting the tax evaders into the tax net, and submit a report on June 30.
Official sources further informed that it was informed to the minister that till date a large number notices has been issued to the persons for not filing of income tax returns and it would take a month to receive their written replies. Afterwards the FBR would be able to proceed against them and would adopt legal course of action allowed under the law to compel them file their returns and pay their due tax. The FBR officials were of the view that due to the shortage of manpower and officials, they are unable to vigorously follow the potential taxpayers in case no one submits its reply against the tax notices.
The minister directed FBR chairman to hire the services of the private sector for vigorously pursuing the NTN holders not filing their returns and in hunt for new taxpayers. The minister also directed the FBR to improve the functioning of the Regional Tax Offices and directed the FBR to streamline the RTOs functioning in similar with the Large Taxpayers Units for broadening of tax base and tax facilitation.