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September 25, 2020

Only 21,396 jewelers obtained NTN out of total 60,000

Top Story

September 25, 2020

ISLAMABAD: The Federal Board of Revenue (FBR) has found that there are only 21,396 National Tax Number (NTN) holders out of total 60,000 jewelers in all over the country but on average only 9,000 filed returns in last five years.

Out of total number of jewelers in allover Pakistan, only 15 percent used to file their returns. The jewelers who possessed luxurious assets and life style, they paid only Rs205 million tax along with tax returns in last five years as the minimum tax amount paid with income tax returns was Rs26 million in one year and maximum paid amount was Rs62 million in last five years from 2014 to 2019.

The jewelers paid over Rs1 billion as withholding tax (WHT) to get back refunds through electricity bills. On average, the filers among jewelers paid only Rs4,500 tax per person.

These startling disclosures were made part of the official report prepared by FBR’s Directorate of Intelligence & Investigation (I&I) Inland Revenues and submitted to the Chairman FBR Javed Ghani.

Official sources told The News on Thursday that the narrowed tax base could be gauged from startling figures that there were 60,000 jewelers in all over the country. The gold sector remained largely un-documented sector in the country. The official report submitted into FBR headquarters showed that the tax machinery withdrew tax exemption from July 1, 2019 so the sales tax was imposed at different rates on un-worked gold, diamond ranging from 0.5 to 1.5 percent of gold value and 3 percent after making changes. So in totality around 5 percent tax was imposed on gold sector.

Out of total 60,000 jewelers, only 21,396 obtained NTN holders so the FBR obtained data of last five years that showed that over 7,000 filed returns in 2015, 8,199 in 2016, 8,992 in 2017, 10,935 in 2018 and 10,524 in 2019 so on average around 9,000 were used to file their returns. Out of total NTN holders, 57 percent were non-filers and 43 percent were filers. However, out of total 60,000 jewelers, only 15 percent were filers with the FBR system.

On account of Sales Tax, there are total 1,080 Sales Tax Registration Numbers (STRN) among jewelers and total paid amount was just peanuts to the tune of Rs90 million in five years from 2014 to 2019.

Out of total 1,080 STRN holders, 157 jewelers remained filers and 923 were found non-filers related to monthly sales tax return.

The FBR report also dwelt upon Entrustment Scheme dated 2-9-2013 under SRO 768 of 2013 and found that 1100kg gold disappeared as total 3,600kg gold was imported out of which 2,400 kg was exported after value addition but there 1,100kg gold worth billions of rupees disappeared having no clue where it had gone.

The Federal Tax Ombudsman (FTO) had also taken notice of misuse of these gold schemes and found that failure in discharging of duties by the department officers resulted into massive losses of revenues to the national exchequer which the FTO termed as sheer negligence, ineptitude, incompetence, and inefficiency which does tantamount to maladministration as defined under section 2 (3) (ii) of the FTO Ordinance.

However, the FBR’s I&I IR Directorate has recommended putting in place special regulatory regime for gold sector in order to streamline this sector effectively.