ISLAMABAD: A cabinet panel has refused to delegate authority of the government to the minister-in-charge of finance in matters of implementation of the Benami Transactions (Prohibition) Act 2017, bringing an end to the practice of handing powers of the executive and parliament over to individuals.
The Federal Board of Revenue (FBR) had sought the powers of the federal government through the act. The draft rules have been framed to execute the Benami Transactions Prohibition Act of 2017 that had been approved by parliament in February this year. The act has not been enforced yet due to the absence of rules which also raises questions about the seriousness of the FBR.
“The Cabinet Committee for Disposal of the Legislative Cases (CCLC) has observed that the powers of the federal government cannot be delegated to any authority,” Dr Mohammad Iqbal, the (Member) Inland Revenue Policy of the FBR, informed the Senate Standing Committee on Finance on Friday.
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He said the FBR had proposed to the federal cabinet to delegate its powers to the tax authority under the Benami rules. The draft rules had been submitted before the federal cabinet that referred them to the CCLC for vetting.
Dr Iqbal said that the CCLC took the decision in the light of the August 2016 judgment of the Supreme Court that said the federal government was the collective entity described as cabinet, constituting the prime minister and federal ministers.
The FBR wanted the federal cabinet to give it a free hand in the appointment of adjudicating authorities and constitution of the appellate benches to implement the Benami law.
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Through the Finance Bill of 2017, the then finance minister Ishaq Dar had obtained the powers of the federal cabinet and parliament in fiscal matters. Under the same strategy, the FBR was seeking more powers.
The FBR’s member policy said that the new position about the CCLC observation had been conveyed to the prime minister in his capacity as finance minister. He said the prime minister had directed the FBR to amend the draft rules accordingly and a new summary would be sent to the federal cabinet for approval.
Parliament has approved the Benami law to prohibit holding a benami property. The law provides a mechanism to prohibit holding property in benami, restrict the right to transfer benami properties, and provide mechanism to confiscate benami properties.
Benami transactions are generally undertaken to commit fraud on creditors, evade taxes and avoid social and political risk in holding such properties.
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The standing committee directed the FBR to fast-track the audit of telecommunication companies after it was disclosed that the companies were evading billions of rupees taxes.
Khawaja Tanveer, FBR (Member) Inland Revenue Operations, informed the committee about the evasion of Rs267 million in terms of withholding taxes during the first quarter of this fiscal year by one company alone.
He said the default was primarily due to non-deduction of withholding tax upon cards sold and balance used in the Federally Administrated Tribal Areas and the Provincially Administrated Tribal Areas.
The member said the company claimed that it did not deduct taxes from consumers in FATA, adding that the fact of the matter was that it deducted the advance tax but did not deposit it in the kitty.
Tanveer said that in addition, Rs62 billion income tax demands against four telecommunication companies were in litigation. He said from one telecommunication company alone, Rs1.6 billion were recovered early this month.
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