The Senate Standing Committee on Finance on Wednesday recommended imprisonment to the Federal Board of Revenue’s (FBR) tax officials in the field formations involved in issuance of bogus or illegal notices to the taxpayers for making frivolous tax assessments to harass the business community.
Chairman of the committee, Senator Talha Mahmood, raised the issue that the tax officials should be sent to jail for issuing bogus notices. “We have received several complaints of excessive tax demands raised before June 30, 2021 to generate revenue. There must be a strict punishment for the tax officials involved in creating excessive tax liabilities. This is harassment and needs to be checked by the FBR”.
The FBR wanted to raise tax demands against the non-filers.
The tax officials involved in sending illegal notices to the taxpayers should also be punished.
He stated that there is a clear contradiction in the statement of the Finance Minister, Shaukat Tarin, on record, and the FBR’s practical demonstration in issuance of notices to the non-filers of income tax returns.
Federal Minister for Railways, Azam Khan Swati, informed the committee that the government should review the existing structure of income tax and sales tax. Sales tax is a major source of revenue, there should be two Members of the Inland Revenue Service.
Azam Khan Swati recommended that around Rs. 1,500 billion worth appeals are pending in Tax Tribunals, and FBR must intervene to decided these cases at the level of tribunal.
Senator Faisal Saleem Rahman informed the committee that the notices have also been issued to the already registered taxpayers.
Senator Mohsin Aziz informed the committee that the number of notcies are more as compared to the actual number of taxpayers, who have filed returns.
Senator Musadik Masood Malik strongly objected that there is a serious issue of efficiency within the FBR and their capacity needs to be enhanced.
Committee members inquired from the chairman FBR about the punishment to the tax officials involved in sending bogus notices to the taxpayers.
Briefing the Senate Standing Committee on Finance on “Tax notices issued during the last three years” here at the Parliament House, Dr Muhammad Ashfaq Ahmed, FBR Member IR Operations, stated that now the income tax return filers stood at over three million.
FBR Member IR (Operations) informed that the FBR has raised tax demands of Rs. 1.347 trillion during 2018-19 to 2020-21. The FBR has served notices for correction of assessment of Rs. 683,141 million in 2018-19 to 2020-21 and passed orders of Rs. 519.346 billion, creating tax demand of Rs. 1.347 trillion during this period.
FBR Member informed that the tax demand of Rs. 61 billion has been confirmed by courts reflecting excellent success rate, Dr Muhammad Ashfaq Ahmed added.
Dr Muhammad Ashfaq Ahmed pointed out, “If we have raised huge tax demands, then we have also collected higher amount of taxes”.
Out of 12,785,497 million notices served to non-filers during the said period, 1.31 million filed returns with tax payment of Rs. 2.5 billion.
Total income tax calculated was Rs. 64 billion in the cases of non-filers.
He informed that 846,296 filed returns against issuance of 4.3 million notices during 2020-21. Out of tax calculated of Rs. 42 billion, Rs. 1.66 billion was paid with the income tax returns. In 2019-20 period, 6,321,903 notices were served to non-filers.
Returns filed stood at 297,282 against tax deposited of Rs669 million.
Tax chargeable was Rs. 12.709 billion.
During 2018-19, the FBR issued 2.1 million notices and enforced 172,342 returns with tax payments of Rs. 259 million against tax calculated of Rs. 9,037 billion.