The Federal Board of Revenue has failed to identify a single case of any prominent politician, parliamentarian or member of National Assembly or Senate in its drive to broaden the tax base through increasing documentation. It is learnt that the FBR carried out income tax assessments of famous cricketers, singers/musicians, Hajj operators and certain high profile persons, but no parliamentarian was subjected to this exercise.
The FBR also identified cases of owners of companies persistently declaring losses and investors in stock and shares. Even banking transactions involving huge amounts are being checked with respect to source of income. The FBR has obtained third-party information on the basis of computerised national identity card numbers (CNICs) about buying and selling of property, new vehicles, bank accounts, rental income, foreign travels and other source of income to bring elite class into the tax net.
Under the exercise, the FBR has identified owners of property, accountholders, frequent travellers abroad with their families and purchasers of luxurious vehicles etc. The FBR has processed data of over 100,000 rich persons, who were not registered with the tax department, but earning huge income or having a luxurious lifestyle.
Experts said that the processing of data by the FBR failed to identify any member of National Assembly or Senate. Despite legal backing to obtain information about the taxpayers under Income Tax Ordinance 2001, the FBR failed to check the income tax records of rich politicians or conduct any kind of income tax assessments on the basis of assets owned by such politicians.
The ostentatious life style of politicians is highly visible, but the FBR's data reconciliation or verification through third party information failed to pinpoint even a single politician whose proper income tax assessment has been done as per provisions of the Income Tax Ordinance 2001.
Sources said that the FBR's failure to carry out income tax assessment of a single parliamentarian implies that no politician purchased movable or immovable property in his/her name. In several cases, the politicians may have declared assets in the names of some third person, which makes it impossible for the tax authorities to carry out actual income tax assessments.
At the same time, the politicians have probably declared agricultural income as source of purchase of immovable properties in big cities. Recently, the FBR has asked the field formations to check big cases where investors have declared agriculture income to justify their investment in properties, stocks/shares, luxurious vehicles, foreign travels, etc. The FBR has obtained information on the basis of CNICs used for purchase of vehicles, properties or foreign travels etc. If any politician has not acquired movable or immovable assets in his own name, the CNIC based information cannot pick him for proper assessment of income tax.
Cynics, however, argue that this is a reflection of FBR's fear to issue notice to the politicians for provisional assessment under section 122(c) of the Income Tax Ordinance 2001. Sources said that so far the FBR has identified more than 100,000 out of tax net cases during last few months and completed action against over 50,000 wealthy persons.
The tax department had initiated income tax proceedings in more than 100,000 cases including notices, assessments, audit, provisional assessments, withholding assessment and other proceedings as per provisions of the Income Tax Ordinance 2001. The tax activity has been witnessed in these cases and around 50 percent cases have been completed in only 4-5 months. Tax activity particularly income tax proceedings has been witnessed in a large number of cases.
FBR had identified 26 sources of information for collection of third party data for discovering new taxpayers across the country. Under the FBR plan, the data has been divided into two categories ie federal and provincial data, which would be separately used to discover new taxpayers. The federal data would be used for verification and reconciliation of information available with the Securities and Exchange Commission of Pakistan (SECP) and Accountant General of Pakistan (AGPR) etc. These kinds of organisations are maintaining data at the central level.
The headquarters of such organisations have been approached for collection/verification of federal data. The provincial level data is being obtained from the government departments and organisations working at the provincial level. Out of 26 sources of information for obtaining third party data, one of the organisations is Employees Old Age Benefit Institution ((EOBI) where small and medium institutions and industrial units have been registered.
Other sources of information include suppliers to the government departments and autonomous organisations. This would help in obtaining data of potential suppliers from the AGPR. Similarly, data of print and electronic media would be obtained from Pakistan Electronic Media Regulatory Authority (Pemra). The registration authorities of NGOs would be approached to obtain data of such organisations. Such non-government bodies consider themselves as exempt, but deduct tax from their employees.
Banks have been approached to collect data on credit cards. Another important source of information would be private educational schools, where people are paying huge fees. These private schools would provide necessary information about the parents who are incurring huge expenditures on education of their children in expensive institutions. Other sources of information include housing authorities, property registrars and provincial registration authorities and motor vehicle registration authorities. A recent income tax circular would also enable the FBR to obtain information about the accountholders from banks on the basis of the CNIC without mentioning bank account number.
The information on domestic and international air travels would also help in checking the expenditures made by the elite still out of the tax net. The data of high users of electricity by commercial or industrial consumers would also be checked under the exercise. Big retailers, hotels/clubs, professionals and service providers would be identified with the help of third-party data.