To get the revenue of nearly Rs 1.2 trillion stuck in litigation, this requires major changes in federal tax laws - the Sales Tax Act, the Income Tax Ordinance, Federal Excise Act and the Customs Act - for speedy prosecution.
Under the strategy, the government is planning to make it mandatory for the tax officials of Federal Board of Revenue (FBR) to file criminal proceedings against taxpayers in cases where the quantum of tax evasion exceeds Rs 10 million.
Secondly, the unregistered potential taxpayers (non-filers) with high net worth would be prosecuted through necessary amendments in the Income Tax Ordinance 2001 for speedy recovery of unpaid taxes from elite class.
When contacted, a senior tax official said that presently section 37A of the Sales Tax Act deals with the powers to arrest and prosecute in cases of tax fraud. However, there is no fixed limit of Rs 10 million to compulsorily file criminal case against the tax evader. After the proposed amendments in the tax laws, mandatory criminal proceedings would be done in cases where the quantum of tax evasion exceeds Rs 10 million.
For the release of revenue of Rs 1.2 trillion (approximately), expeditious disposal of tax litigations cases needs to be ensured through amendment in tax laws and capacity enhancement of FBR's Legal Wing.
Sources said that Ministry of Law and Justice in consultation with FBR would formulate necessary proposals for ensuring expeditious disposal of tax litigation cases.
The measures for expeditious disposal of tax litigation cases revealed that
a review of tax enforcement laws would be undertaken by Ministry of Law in consultation with FBR for proposing penalties and punishments for tax evasion and non-compliance.
The plan further revealed that each RTO/LTU would be authorized with proper Prosecution and Legal Wing responsible for initiating criminal proceedings against defaulters and prompt disposal of litigations.
The FBR will also be required to revisit the mechanism of appeals for elimination of excessive tiers and laying down specific time limits for disposal of tax litigation at each stage by FBR Member Legal.
The establishment of special tax benches at High Courts and Supreme Court of Pakistan by Ministry of Law is also proposed for expeditious disposal of tax litigation cases.
It has been proposed to establish Directorate General of Public Grievances at FBR headquarters as effective alternate dispute resolution mechanism (ADRM).
There is also a proposal for provision of requisite resources for reorganization and capacity enhancement of FBR's Legal Wing.