FBR to deploy officials in companies to check tax evasion

KARACHI: The Federal Board of Revenue (FBR) will soon post its officers in various companies to collect information about productions, supplies and alleged tax evasions, sources said on Thursday.
Sources in the local tax department said Tariq Bajwa, chairman, FBR, visited the Large Taxpayers Unit (LTU) and Regional Tax Offices (RTOs) Karachi on April 13 to review the revenue collection performance in the last three quarters and identification of avenues to generate revenue during the last quarter of the ongoing fiscal year.
During the meeting, issues were raised regarding the concealment of taxes by various units by suppression of sales and the FBR chairman allowed the officials to invoke Section 40-B of the Sales Tax Act, 1990, the sources said.
Under Section 40-B of the Sales Tax Act, the FBR or the chief commissioner of a unit can post officer of IR to the premises of registered person or class of such persons to monitor production, sales of taxable goods and the stock position.
Furthermore, the law authorised a commissioner on the basis of material evidence to believe that a registered person is involved in evasion of sales tax, the sources said.
The law also explained through the Finance Act, 2014: “For the removal of doubt, it is declared that the powers of the board, chief commissioner and commissioner under this section are independent of the provisions of Section 40.”
Under this provision of the law, the tax machinery after obtaining warrant from the magistrate can conduct search under the Code of Criminal Procedure, 1898.
The sources said these provisions would be invoked in two major sectors, ie, sugar and cement. The chairman has been informed that there were serious discrepancies in the financial records provided by the companies in those two sectors, whereby suppressing sales the company had evaded their due liabilities.
The collection of sales tax from cement and sugar was Rs20.1 billion and Rs9.189 billion in 2013/14, showing a growth of 75.5 percent and 7.5 percent, respectively, over the previous year. Whereas, the collection of sales tax from these sectors during the first half of the fiscal year 2015/16 is Rs8.7 billion and Rs4.64 billion, respectively, posting a growth of 4.5 percent and 11.6 percent, respectively, from the collection in the corresponding quarters of the last fiscal year.
A few months ago, the revenue authority had conducted detailed analysis of various sectors and on the basis of its outcome took action in some cases.
The sources said the FBR chairman stressed on the audit and recoveries without creating unnecessary harassment to the taxpayers.
The chairman had been informed that some quarters, including senior FBR officers were interfering in the audit cases. The chairman assured his full support in their efforts in revenue generation.
Member IR Operation, Director General Inspection and Audit and Director General Intelligence and Investigation accompanied the FBR chairman during the visit.
The FBR provisionally collected Rs1,755 billion during July–March 2014/15, much less than its full-year target of Rs2,691 billion.