FBR to deploy digital hub for withholding tax monitoring

KARACHI: The Federal Board of Revenue (FBR) is developing an online hub to accumulate details of withholding tax agents, their collection and further disbursal to the tax authorities in order to plug revenue leakages and address discrepancies, a senior official said on Friday.

“The digital directory will be ready in a week and instructions in this regard have been issued to the Pakistan Revenue Automation Private Limited,” Rehmatullah Khan Wazir, Member Inland Revenue (Policy) told The News.

Presently, the data of withholding taxes is scattered and the tax machinery takes action on random basis.  Withholding agents collect taxes on behalf of the FBR and deposit them to national exchequer. Withholding taxes make around 68 percent of the total collection of direct taxes. 

The FBR collected Rs831.4 billion in withholding taxes during the 2015/16 fiscal year as compared to Rs691.2 billion in the preceding fiscal year, depicting 20.3 percent growth. Wazir said the whole tax machinery would be able to access this database to take an appropriate action. The data would be available at the national level.

“The main database will be available with the Director General Withholding Taxes,” he added, “while chief commissioners will have an access to the data on jurisdiction basis. Commissioner of Inland Revenue will also be given an access to zone-wise data.”

Member Inland Revenue said the authorised tax officials will compare the tax deduction and payment by each withholding agent. “In case of any discrepancy, the zone will take further action.”

Wazir, who also holds an additional charge of Member Inland Revenue (Operations), said the digital directory will have details of all withholding agents along with their collection and payments in term of value and volume.

The digital directory will display the withholding agents corresponding to their sectors.  The FBR convened a meeting of commissioners of Inland Revenue (Withholding Tax) at its headquarters in Islamabad this week to review the existing position of collection under various heads of withholding taxes. Member Inland Revenue (Policy) presented the digital directory proposal during the meeting.

A couple of years back, DG Withholding Taxes issued procedure for monitoring of withholding taxes, considering an ever-increasing size of withholding tax collection. It was told that in a number of cases tax was deducted by withholding tax agents but not timely deposited to the government treasury and the defaulters went unpunished.  “Due to no desk audit and no real time check on the business transaction/evasion, timely deposit of tax deducted by the withholding agents is open to doubts,” said a document.