FBR to move high court against tribunal decision on tax assessment

ISLAMABAD: The Federal Board of Revenue (FBR) has faced another severe blow to its desired tax collection target of Rs3,621 billion for 2016-17, as the appellate tribunal has rejected billions of rupees collection against tax assessment made by tax officials in Karachi in case of National Bank of Pakistan (NBP).

If the board doesn’t challenge the appellate tribunal’s decision in the superior courts then they will have to return around Rs20 billion to the NBP, making it harder for the tax machinery to bridge the yawning gap between collected taxes and desired collection target on monthly basis. 

Against desired tax target of Rs1201 billion, the FBR has collected Rs1,084 billion so far in first five months, registering a shortfall in the range of Rs117 billion in July-Nov period of 2016-17. This reporter sent out a written question to the NBP three days back; first of all, requests were made to wait for getting version on the pretext that they had not received any formal order of the appellate tribunal. 

In a brief reply, the NBP spokesman replied that the bank denied receiving any order in this regard. On further query of Rs23 billion assessments against NBP which was now rejected by the tribunal, the NBP spokesman said the amount mentioned in the query is also not correct. This reply at least confirms that there was some amount which was expecting by the NBP from the FBR on this account.

However, one top gun of the FBR told The News on Thursday that there was controversy related to definition of law on the basis of which the FBR had generated demands and collected money from the banking sector. “We will approach the High Court against the verdict of appellate tribunal in such cases,” he added.

When top officials of the FBR were contacted, they said that the Board would approach the high court after receiving written order in this regard. They said that there was tax demand generated by the FBR over the years so the FBR would avail all forums to protect its demand. 

The FBR is facing gigantic task to achieve the tax collection of Rs391.7 billion during the ongoing month (December, 2016) and also materialized shortfall of Rs117 billion incurred in first five months(July-Nov) period of the ongoing financial year.

The FBR’s top official said that they were facing in-built shortfall of Rs20-22 billion mainly because of fiscal policies being pursued by the government as the government preferred to keep prices of POL products unchanged and also revised downward tax rates so it was causing revenue loss to the tune of Rs13-15 billion on a monthly basis. Federal finance Minister Ishaq Dar had told reporters last week that the revenue loss on account of POL products stood at Rs13 billion on per month basis. 

Some other relief measures taken by the government on the eve of the budget 2016-17 had also played havoc with ttax collection as the decision of bringing down sales tax rate on fertilizer from 17 percent to 5 percent was causing a loss of Rs2-2.5 billion to the national exchequer. 

The government’s decision to introduce zero rating regime for export oriented five sectors as well as their allied sectors such as chemicals and others were causing revenue loss to the tune of Rs4 to Rs5 billion on monthly basis.  

When FBR’s spokesman Dr Iqbal was contacted for comments, he said there was no plan to revise downward the tax collection target of Rs3,621 billion for fiscal year 2016-17.  He said the FBR had prepared a comprehensive strategy for achieving the envisaged target set for December 2016.