Taxpayers barred from revising wealth statement after disclosure

KARACHI: The government has abolished ‘usual’ relaxation given to taxpayers to revise the wealth disclosure even years after its filing, according to the people familiar with the finance bill.

Sources on Monday said the government imposed a restriction on taxpayers on revising wealth statement to ensure true declaration. It was proposed through the Finance Bill, 2020 that taxpayers should not be allowed to revise their wealth statement after five years of filing declaration.

Filing of wealth statement is mandatory for taxpayers to file annually along with filing of income tax return. The wealth statement explains the assets and liability of a taxpayer during a year. Besides, the statement also carries details of expenditure incurred during the year.

This statement is also a tool for tax authorities to determine the earnings of a taxpayer. In case the authorities believe the taxpayer concealed the income or having unexplained sources then he or she might be tried as per law.

There used to be a provision in the tax law that allowed taxpayers to amend their statements any of past years.

Chartered accountant firm AF Ferguson & Co, a member firm of the PricewaterhouseCoopers network, said filing of a revised wealth statement has been made subject to prior approval of the Commissioner Inland Revenue, as per an amendment proposed through the Finance Bill 2020

“The commissioner may grant approval in case of bona fide omission or a wrong statement,” the firm said in a post-budget report. “Wealth statement cannot be revised after five years from filing of such wealth statement.” Another important proposal regarding final tax regime has been made through the Finance Bill 2020.

At present, taxpayers falling under the final tax regime are not required to file annual income tax return. Instead, if falling under the FTR they are required to file statement with minimum requirement. Such statements only required a disclosure of gross receipts and related withholding tax, according to AF Ferguson.

In most of the time, these cases are not selected for audit being falling under the FTR.

The concept of statement in lieu of return is proposed to be omitted. It was proposed to empower the Federal Board of Revenue to prescribe returns for different classes of income or individuals, including those covered by final tax regime.

“This is procedurally a very significant and important amendment that exhibits the intention of the government to enforce documentation even for final tax regime,” the firm said in the report.