KARACHI: The Federal Board of Revenue (FBR) has started probe into the sources of remittances received by the individuals after the board withdrew the audit exemption for them in a bid to check black money flows into the economy, officials said on Thursday.
The FBR withdrew the audit exemption given to individuals, who declare foreign remittances as their only source of income.
“During the past years, the persons having foreign remittances as their sole income were exempted from audit,” an official at Regional Tax Office said. “However, the FBR revisited and withdrew such exemption through Audit Policy 2016.”
The official said the exemption paved the way for inflows of black money into the economy as tax authorities were restrained from questioning a person about the details of foreign remittance source.
“Now, a person, providing evidence of remittance transfers, will continue to enjoy immunity from the source questioning,” the official added, “but, if the person fails to provide evidence then tax authorities will conduct a probe.”
FBR sources said in several past transactions individuals had declared foreign remittances on purchasing properties and motor vehicles, travelling abroad and paying school fees. “Since they were exempted from audit the tax authorities were unable to probe into their financial transactions.”
The relief from questioning regarding source of foreign remittances remained a disputed issue. Tax managers and practitioners stress that the government should check the provision. However, the government, in order to maintain the flow of foreign remittances, continued to provide shelter to the recipients.
“Immunity on account of probing against unexplained inward remittances needs to be restricted,” said the Tax Reform Commission (TRC), in a report submitted to the ministry of finance.
Under Section 111(4) of Income Tax Ordinance, 2001, a taxpayer is not required to provide nature and source of any amount of foreign exchange remitted from outside Pakistan through the banking channel.
Tax experts said though this restriction promoted inflows of foreign remittances, yet it also encouraged persons for not registering themselves with the tax authorities and submitting genuine ‘income declaration’.
The TRC advised the finance minister that in order to curb the misuse, the inflows should be restricted to personal remittances from overseas non-resident Pakistani with a threshold of $25,000 in a tax year.
A trader can be seen at the Pakistan Stock Exchange building in Karachi. — PPI/FilesKARACHI The Pakistan Stock...
Engro Fertilizers Limited plant can be seen in this undated image. — LinkedIn/Engro Fertilizers Limited KARACHI:...
A representational image of a chemist looking for medicines in his store. — AFP/FileLAHORE: The Pakistan...
This image shows the SRB logo on a wall inside the building. — Facebook/Sindh Revenue Board, Government of...
This image shows the Logo of UBL at the building. — Facebook/UBL - United Bank Ltd/FileKARACHI: United Bank Limited...
IMF headquarters in Washington. — AFP/FileWASHINGTON: The International Monetary Fund urged countries on Wednesday...