The Directorate-General of Intelligence and Investigation, Inland Revenue, has enforced record number of 22,000 income tax returns by undocumented persons up to June 29, 2011 with provisional assessments against over and above 14,000 wealthy individuals, reflecting cumulative action against more than 36,000 tax dodgers.
Sources told Business Recorder here on Wednesday that the intelligence arm of the FBR has estimated to show a major jump in compilation of national data on persons brought into the documented regime by June 30, 2011. This is for the first time in the history of Pakistan that such a large number of persons have filed returns in a short-period of three months as a result of enforcement by Broadening of Tax Base (BTB) Units in the field formations.
The updated tax profiles maintained by the DG I&I IR shows that Rahat Fateh Ali Khan, a famous musician, singer of Qawwali, has deposited over Rs 3.6 million as tax along with the income tax returns for past tax liabilities. The data of the agency further showed that Salman Butt, a renowned cricketer, has deposited Rs 1.5 million as income tax. Along with the income tax return, the deducted amount comes to over Rs 1.5 million. On the similar pattern, the DG I&I IR has also maintained tax profiles of other undocumented persons, who have been brought into the tax net from Karachi, Lahore, Peshawar and other cities.
Sources said that provisional assessments completed against 14,000 persons across the country have reflected a new trend in Pakistan where people have realised to voluntarily file their income tax returns. The results would be more visible in coming period of September when income tax returns are due to be filed by the eligible persons. "It is a record that 22,000 persons have responded to notices and over 14,000 provisional assessments have been complied based on third-party information in a short period of three months", sources said.
The tax profiles of the undocumented persons further showed that there were many cases where people had under-declared their income. These people were confronted with the actual data from third-party sources and they filed revised income tax returns for declaration of correct income. The impact of the ongoing documentation exercise is very much visible as the directorate has to follow the legal procedure under the law before taking any action against the persons against whom provisional assessments have been completed under section 122 (c) of the Income Tax Ordinance 2001.
According to the analysis of the directorate, the agency has further detected persons who have maintained 2-3 bank accounts reflecting millions of rupees in their accounts. During the documentation exercise, The DG DG I&I IR also focused on provisional assessments of directors of private limited companies, who have frequently travelled abroad with their families and their companies are persistently showing heavy losses. The agency had issued provisional assessment notices under section 122 (c) of the Income Tax Ordinance 2001 to explain their source of investment. The agency was able to document potential persons, who have travelled abroad with their whole families.
The exercise was very successful and people have voluntarily started filing returns. In other cases, people have amended their income tax returns to declare the actual income. In this connection, the FBR has compiled data from various sources of investment to confront the taxpayers with authentic data to prove concealment of income by the wealthy persons. The assessments under section 122 (c) could be declared as 'protective assessments' which is usually on the higher side. Responding to notices of provisional assessments, the taxpayers are now ready to deposit some amount in the national exchequer.
Shahid Hussain Asad, Director General, Directorate of Intelligence and Investigation, Inland Revenue is determined to continue this ongoing exercise of documentation with the help of BTB Units in the field formations in coming months. The creation of new intelligence agency of the FBR would take some innovative steps in future to broaden the tax base from next fiscal year, sources added.