A deputy commissioner of Inland Revenue Service (IRS) of the Federal Board of Revenue, who issued tax recovery notices to stockbrokers, was transferred and made officer on special duty (OSD).
Sources said the PSX Stockbrokers Association (PSA) was instrumental in the transfer of the FBR official.
The Deputy Commissioner IRS had issued notices for income tax recovery amounting to Rs. 7 billion. The notice states the brokers show less income despite having large deposits in their company accounts.
According to documents obtained by ProPakistani, NAEL Capital and Misbah Securities were selected for audit for the financial year 2015-16. The FBR asked the selected taxpayers to contact Inland Revenue Services’ Karachi office with relevant documents.
The notice states that the tax authority obtained details of bank accounts of these two brokerages houses from Stock Exchange’s branch. In its notice, the FBR said that both brokerage houses did not declare their full income for the financial year 2015-16.
The NAEL Capital showed Rs. 17.3 million income but it has Rs 4.4 billion in the company account. This shows a difference of Rs. 4.2 billion between the income shown in the tax returns and the deposits in the account. The company showed Rs. 12.4 million expenses under the head of salaries and Rs. 239,000 under repair and maintenance’s head.
The FBR asked NAEL Capital to pay Rs4.46 in term of income tax.
The notice issued to Misbah Securities stated that the brokerage house declared income of Rs.54.2 million. But the Board found Rs. 1.74 billion in its account. The company paid Rs. 7.1 million in salaries and spent Rs.693,000 on repair and maintenance.
The Board asked Misbah Securities to pay Rs. 2.55 billion as income tax.
Regarding the issue, PSA President Hamad Nazir Kehar said that the PSA contacted State Minister for Revenue Hammad Azhar soon after the recovery notices were issued. The Minister took notice of the issue and asked the Regional Commissioner to take cognizance of the notices being issued to brokers creating hefty demands, Kehar said.
The Regional Commissioner assured that the field officers would be issued proper instructions, the PSA office-bearer said.
After this development, the FBR took action against the Deputy Commissioner IRS, who was transferred and made officer on special duty (OSD).