Tax amnesty scheme: Govt extends deadline for filing returns by a month

Tax return filers still below 7,700 mark against claims of a million

ISLAMABAD:

An apparently dejected government gave a third extension on Thursday in the tax amnesty scheme as the number of filers could not cross 7,700 while authorities struggled till late night to reach close to the nine-month revenue collection target of Rs2,105 billion.

In July-March 2015-16, the Federal Board of Revenue (FBR) could collect Rs2,088 billion till Thursday night. “The figure is expected to rise further as field formations of the FBR were in the process of reconciling the data,” said Dr Mohammad Iqbal, the FBR spokesman.



“We expect to cross Rs2,100 billion, which itself is a big achievement,” said Haroon Akhtar Khan, Special Assistant to the Prime Minister on Revenue.

In case, the FBR misses the Rs2,105-billion target, Pakistan will have to seek a waiver from the IMF executive board. The FBR had also fallen short of the Rs1,390-billion target for the first half of the fiscal year, though only with a thin margin.

The provisional collection in nine months was Rs314 billion or 17.7% higher than the comparative period of previous fiscal year.

For the entire current year, the revenue collection target was set at Rs3,104 billion. Owing to the poor performance in the first five months, the government had introduced a mini-budget in December last year.

This gave a major push to the revenue flow as the government heavily taxed imports of goods, making raw material expensive and causing an increase in inflation.



The government has also recovered an extra Rs92 billion during the July-February period from consumers of petroleum products by increasing the sales tax up to 108.7% of the ex-refinery price of high-speed diesel.

The FBR’s audit function remains weak, allowing taxpayers to escape the law despite under-declaring their earnings. It also could not make progress in cases of 44 politicians that were selected for audit including Punjab Chief Minister Shahbaz Sharif.

Return filers

Finance Minister Ishaq Dar has extended the last date for filing tax returns by the traders under the Voluntary Tax Compliance Scheme by one month to April 30, announced the Ministry of Finance. He also extended the application of the concessionary 0.4% withholding tax to banking transactions by non-filers of income tax returns by one more month.

It was the third extension in the scheme after the government badly failed to achieve the target of bringing one million people into the tax net.

So far, 7,695 traders have filed income tax returns and paid Rs731 million in taxes, said Dr Iqbal.

The government’s decision to keep the withholding tax rate unchanged at 0.4% instead of increasing it to 0.6% indicated the lack of will to go after the non-filers who are considered traditional voters of the ruling party.

The standard withholding tax enforced from July was 0.6% that the government halved to appease the traders.

Despite claims of expanding the tax base, the income tax return filers, both individuals and companies, dropped to 925,000, about 120,000 less than the previous year.



Protected by an Act of parliament, Prime Minister Nawaz Sharif had offered the ninth amnesty scheme, second of his government, to both non-filers of income tax returns and to those who were already in the net but concealed their actual income.

The All Pakistan Anjuman-e-Tajiraan, a splinter group of traders, had claimed that the scheme would help bring in one million traders in the tax net out of 2.8 million who remain outside the net.

On the traders’ demand, the government set the amnesty scheme rate at 1% and offered them four-year amnesty from audit. However, the strategy of not involving the Punjab government-backed Khalid Pervez group of traders into negotiations backfired.

Published in The Express Tribune, April 1^st,  2016.

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