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September 27, 2020

FBR links time extension for tax amnesty payment with legal change

Business

September 27, 2020

KARACHI: The Federal Board of Revenue (FBR) has ruled out a time extension in payment under the tax amnesty scheme announced last year, citing a need of legal change for any such concession, sources said on Saturday.

The sources said earlier this month notices for concealment of assets were sent to the defaulters under the tax amnesty scheme. However, a large number of declarants requested tax authorities to give them time to make payment.

An official at Regional Tax Office (RTO) Karachi said the declarants asked for further time in payment of taxes under the amnesty. Due to coronavirus lockdown and halt of business activities they said they were unable to make payment by the due date, said the official.

“Since issuance of the amnesty scheme was an act of parliament therefore the time extension would need to be legislated through the parliament,” the RTO official said.

In May last year, the government announced the tax amnesty, which covered undisclosed foreign and local assets (including benami) and expenditures.

The declarants under the amnesty scheme were allowed to pay tax amounts in installments with default surcharges. The scheme of payment with default surcharges was 10 percent in case due amount was paid by September 30, 2019; 20 percent in case the outstanding amount was paid by December 31, 2019; 30 percent in case the due amount was paid by March 31 and 40 percent in case tax amount was paid by June 30.

The RTO Karachi has estimated Rs610 million is recoverable against declared assets on the basis of tax rate applicable for the amnesty. The amnesty scheme allowed declaration of all assets except domestic immovable properties at four percent. A tax rate of 1.5 percent was offered for undisclosed domestic immovable properties. Meanwhile, undisclosed foreign liquid assets not repatriated were offered to get clear chit at 6 percent. The amnesty scheme offered 4 percent for unexplained expenditures and two percent for undisclosed sales.

The amnesty scheme provided comprehensive immunity from other laws except for those in which money is derived from proceeds of crime or terror financing. Further, public office holders were not allowed to avail the scheme. The official said since the declarants failed to make payment by June 30and the FBR didn’t grant any extension in time for payment thus the tax department would reject the declaration under the amnesty.

In case of rejection of the declaration, the declared assets/income will attract normal tax rate besides penalty of equal amount of tax payable will also be recovered, the official added.

The FBR sent 560 notices to defaulters. The FBR decided to initiate penal action against amnesty declarants, who failed to make tax payment against hidden assets that were declared under the amnesty scheme, sources said.