The Federal Board of Revenue (FBR) has launched large-scale investigation against 5,600 major investors in stock and shares, for which information has been obtained from the National Clearing Company of Pakistan Limited (NCCPL) and Central Depository Company of Pakistan Limited (CDCPL), to bring them into the documented regime.
Sources told Business Recorder here on Sunday that the 5600 Lahore-based investors have made huge investments in stock and trade, but they have neither obtained National Tax Number (NTN) nor were filing their income tax returns. The FBR has issued instructions to the Chief Commissioners of the Regional Tax Office (RTO) Lahore-I and RTO Lahore-II to investigate potential cases where huge investments have been made in the stocks and shares. The FBR has also provided data in electronic format to the field formations to document all major investors in stock and shares.
According to the FBR instructions, the investment in stocks and shares is perhaps the third largest portfolio of domestic investments, ranking only after real estate and bank deposits. Despite its massive volume and equally overwhelming number of transactions, mostly this sector remains out of the tax net. The FBR Directorate General Inland Revenue has made some inroads in the realm of stocks and shares which are shared with the concerned field formations.
The FBR instructions further stated that under the instructions of Securities and Exchange Commission of Pakistan (SECP), all transactions in stocks and shares need to be fully documented. For this purposes, two corporate bodies have been put in place--National Clearing Company of Pakistan Limited, for the provision of clearing and settlement of services to all three stock exchanges in the country, and Central Depository Company of Pakistan Limited, which provides depository services to a wide range of capital market participants which includes brokers, asset management companies, banks (including custodian banks) and general retail investors. This clearly indicates that while NCCP settles daily transactions in stocks and shares, CDC works as the bank/depository of shares, the FBR maintained.
The FBR further stated that while conducting their normal business, computerised national identity card number (CNIC) of individual investor is used by both entities as Unique Identification Number (UIN).
The FBR has gathered information in 5600 cases relating to RTO, Lahore-I/Lahore-II, regarding individual investors who maintain accounts with NCCP/CDC, but they do not exist on the tax roll. Apart from their identifiable particulars, this information also covers bank account information of the said investors as well.
The FBR instructions further said that detailed information of transactions in the cases of individual investors can be obtained directly by the concerned Broadening of Tax Base (BTB) officers from the concerned Company's Secretary/Chief Financial Officer CDC.
The field formations should immediately re-ascertain the jurisdiction of aforementioned cases, and wherever it so requires, the cases may be transferred to the relevant jurisdictions under intimation to the FBR. Secondly, for the processing of cases with valid jurisdiction, the standing operating procedure (SOP) for such cases, already circulated by the FBR is to be followed both in letter and spirit. Any deviation would be treated as express violation of official instructions, FBR instructions to the field formations added.