Revenue body issues notices to 312 car dealers

KARACHI: The Federal Board of Revenue (FBR) on Saturday issued notices to 312 car dealers and sellers of auto parts, asking them to get registered with the tax authorities.

The broadening of tax base unit of Regional Tax Office (RTO-II) Karachi in a survey found that hundreds of owners of automobile showrooms, car dealers, and sellers of auto parts were not on the tax roll despite having significant earnings.

“During the field survey and information collected from various other surveys, it was found that a large number of automobile showrooms, auto parts dealers/sellers, automobile workshops, car service centres having booming business activity are not registered or not filing their tax returns,” RTO-II said in a statement.

The tax department identified 312 potential taxpayers from the auto industry and served them with notices under a tax law (section 176 of the Income Tax Ordinance 2001).

The FBR in its ongoing broadening of tax base drive is approaching non-compliant taxpayers to bring them on the tax roll. Notices have also been issued to doctors, restaurants, bakers, and milk shops, asking them to file income tax returns and wealth statements.

The FBR received 2.28 million income tax returns for the tax year 2018. The revenue body extended the last date of returns filing for tax year 2018 multiple times. The filing deadline is August 09, 2019.

Pakistan’s authorities are under an immense pressure to restore external and internal balance to resume sustainable growth that plunged to 3.3 percent in the last fiscal year from 5.5 percent in the preceding fiscal year.

The International Monetary Fund (IMF) said Pakistan is facing a problem of low level of revenue collections relative to GDP and to many other emerging markets and peer countries.

“We have put the focus on increasing revenues by broadening the tax base, not by increasing tax rates while making sure that the share of population contributing to revenues is increased and in trying not to continue with exemptions and concessions which have been a major source of leakage in the tax base,” the IMF said in a document.

Pakistan agreed to an IMF’s $6 billion loan program earlier this month to avert its balance of payment crisis.

The three-year reforms program aims to help the country increase revenue mobilisation by four to five percent of GDP at the federal and provincial levels over the program period.

Budget deficit, including grants, are projected to increase to 7.1 percent of GDP in FY2020 compared to 6.8 percent in the last fiscal year, according to the IMF.

Budget deficit was estimated at 6.4 percent in FY2018 as opposed to 5.8 percent in FY2017, 4.4 percent in FY2016 and 5.3 percent in FY2015.

IMF projected primary deficit, excluding grants, to narrow at 0.6 percent in FY2020 under its reforms program from 1.8 percent in FY2019.