Senate body slams ‘excessive’ tax demands by FBR

ISLAMABAD: The senate standing committee on finance and revenue on Wednesday took strong exception to ‘excessive’ tax demands from existing filers and advised action against officers involved in sending these notices.

The senate standing committee on finance and revenue held its meeting under the chairmanship of senator Taleh Mehmod.

The chairman of the panel said they were receiving complaints about the Federal Board of Revenue’s (FBR) excessive demands to generate tax revenues. “This is harassment that needs to be checked and avoided,” he added.

Some committee members were so emotionally charged that they said all those who were involved into sending wrong tax notices should be hanged at D- Chowk in front of parliament.

The chairman of the committee inquired whether or not instructions were issued for raising excessive tax demands and upon which the FBR’s Member Inland Revenue (Operation) Mohammad Ashfaque replied that no such instructions were issued to the field formations.

Ashfaque strongly defended the FBR position and argued that no instructions were issued to raise ‘frivolous’ tax demands in the last financial year ended on June 30, 2021.

He informed the committee that the FBR issued more than 12 million tax notices to non-filers through system based during last three years from 2018-19 to 2020-21. He said now the number of return filers of income tax stood at over 3 million.

Of 12,785,497 notices served to non-filers during the last three years period, 1.31 million filed returns with tax payment of Rs 2.5 billion. Total income tax calculated was Rs 64 billion in these cases of non-filers.

FBR Member said the desk-audit of almost 90 percent of the income tax return filers was conducted, but notices were served to only selected in potential cases. Even in cases of multinational companies it was found that the actual sales in bank statements revealed Rs 50- 100 billion as compared to the declared sales of Rs 2-3 billion.

He informed that 846.296 filed returns against issuance of 4.3 million notices during 2020-21. Out of tax calculated of Rs 42 billion, Rs 1.66 billion was paid with the income tax returns. In 2019-20 period, 6,321,903 notices were served to non-filers. Returns filed stood at 297,282 against tax deposited of Rs 669 million. Tax chargeable was Rs12.709 billion.

During 2018-19, the FBR issued 2.1 million notices and enforced 172,342 returns with tax payments of Rs259 million. He said the FBR has served notices for correction of assessment of Rs683.141 billion in 2018-19 to 2020-21 and passed orders of Rs519.346 billion, creating tax demand of Rs1.347 trillion during this period.

Senate standing committee on finance further directed ministries of finance and commerce and State Bank of Pakistan to investigate and submit report to the committee in a month as to why PayPal is not operating in Pakistan.