FBR to recover 3-year old levy

KARACHI: The Federal Board of Revenue (FBR) sent notices to high net worth individuals for their failure to pay one-time tax the government imposed three years back to support economically-distressed people, officials said on Tuesday. 

The officials said the government, through Finance Act, 2013, slapped 0.5 percent tax, known as income support levy, on the net moveable wealth, exceeding one million rupees. The law was introduced for one year. The purpose of the law was to provide financial assistance and social protection to economically-distressed persons and families. Officials said the FBR issued notices to high net worth individuals for outstanding payment of the tax year 2014.

“The recovery notices have been issued to those persons, who failed to pay the tax despite having described assets during the tax year 2014,” a FBR official said on condition of anonymity.

The law was repealed in the subsequent year over the reservations raised by the rich people.  The official said taxpayers had moved court against the levy soon after its imposition. “Therefore, Sindh High Court allowed general stay, barring the tax machinery from collecting tax,” the official said. “But, the stay was recently vacated.”

The official said the court granted the stay again only in one case. The official added that the FBR sent notices as the stay was restricted to one person, “but the action can be taken action against other defaulters.”

Tax experts, however, resented the move. They compared it with harassment of the existing taxpayers.  The experts said law was implemented only for one year and tax departments have no power to collect the levy.

“It (the law) has no ‘saving clauses’ that empower the tax authorities to recover amount after a lapse of time,” said Rehan Jafri, president of Karachi Tax Bar Association. Jafri said the tax was imposed to help internally displaced persons. “For whom, the tax authorities are collecting the tax for,” he questioned.  He said a stay granted by the court is applicable to all the cases and, “the court granted general stay as such”.

Under the law, an officer of Inland Revenue is empowered to assess income of high net worth individuals and issue notice for the tax payment. Defaulters are also required to pay default surcharge at the rate of sixteen percent a year on the amount unpaid or short paid.