FBR plans new campaign against non-filers

KARACHI: The Federal Board of Revenue (FBR) planned to toughen its campaign on hidden cash soon after the lapse of amnesty dateline, due end February, in a bid to crack down on people evading tax, an official said on Monday.

The official said tax authorities would not stop at deducting withholding tax on the banking transactions of non-filers as a new campaign has been planned and after the lapse of return-filing deadline, notices would be issued to non-filers.

“We have all the data of banking transactions and those have already been sorted out and such account holders paying withholding tax for being non-filers would be issued notices,” an official said. “Such account holders would be issued notices to be followed by audit and penalties.”

The official said withholding tax at the rate of 0.6 percent is applicable on banking transactions over Rs50,000/day for non-filers and “people making such healthy transactions are surely having taxable income.”

In the budget 2015/16, the government introduced Section 236P into the Income Tax Ordinance, 2001 and imposed 0.6 percent withholding tax on non-cash banking transactions made by non-filers of income tax returns on an amount exceeding Rs50,000/day.

The levy resulted in hue and cry from the trading community and later compelled the authorities to reduce the rate to 0.3 percent.

Still the reduction was not acceptable to the trade community and the government launched the Voluntary Tax Compliance Scheme (VTCS) to entice such persons, who are out of the tax net.

A tax practitioner said the traders did not welcome the tax amnesty scheme and only a handful of traders opted for the documentation under the VTCS. The reason for the muted response, he said, was that if they would sign in to the scheme to avoid 0.3 percent tax they would have to declare assets and actual sales and that meant the standard sales tax. 

The traders usually do not disclose their actual sales and incomes and operate ‘Benami’ accounts to hide their sales. The official said VTCS had not been as successful as planned therefore the FBR had planned a non-voluntary approach to bring people into the tax net .