No loans taken from banks to meet revenue collection: FBR

KARACHI: The Federal Board of Revenue (FBR) has denied taking advances or loans for its collection and subsequently benefiting banks by paying 15 percent markup on it, a statement said on Friday.
The revenue authority said it had not taken any advance from the banking companies. Moreover, compensation was being paid on those cases where appellate tribunal, high court and the Supreme Court have set aside the demand created and collected by the FBR in the past, it said.
Officials in the local office said the banking sector has a huge quantum of litigation because of involvement of complex legal issues.
These issues are often subject matter of litigation, which goes right up to the level of the Supreme Court. Many of these issues are still under litigation and the matter has not attained finality so far.
An official at the LTU Karachi said, “Refunds in major banks are created as a consequence of appeal effects as a result of relief allowed by the appellate tribunal on addition made on different issues, where the FBR is contesting before the high court.”
The FBR said the cases of refunds pertain to the period 1991 to 2012. The compensation paid is subject to 35 percent income tax, it said, adding, thus the effective rate is 9.75 percent and not 15 percent.
The revenue authority; however, decided in the future in case refunds are created as a result of decision of an appellate authority, the commissioner must immediately file an application, seeking stay order along with the appeal against the appellate order.
“If stay order is not granted or the order has attained finality the decretal amount must be settled within three months of the order. This will ensure that such a problem does not arise in the future,” the FBR said.