High-level panel formed to arrest big tax evaders
The federal government has formed a high-level committee, comprising the finance minister, the Federal Board of Revenue (FBR) chairman and senior members to authorise the arrest of any person involved in deliberating hiding income and evading taxes.
Also, the government fixed the minimum amount limit, above which the arrests could be made, subject to the written approval from the committee. The powers of making arrests would come into effect from Thursday (tomorrow), the first day of the new fiscal year.
The powers of arrest were made part of the Finance Bill, which was passed by the National Assembly on Tuesday. It will take effect in the form of the Finance Act from the new fiscal year, beginning on July 1 (tomorrow).
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The committee may approve the arrest of any person, who is a non-filer of tax returns and suspected of concealing income worth Rs25 million or more. Similarly, in case of a filer, the limit is Rs100 million. For this purpose, the Finance Bill amended Section 203A of the Income Tax Ordinance (ITO) and also added Section 203B.
The amendments stated that if the auditors of the FBR, while conducting audit under Section 177, Section 214C, Section 121 and Section 122 of the ITO and amended assessment orders, found evidence of tax evasion and concealment of income, the case will be referred to the high-level committee.
After the approval of the committee – comprising finance minister, FBR chairman, and senior members of the FBR – those involved in tax evasion could be arrested, the amendments stated. The committee would approve the arrest of tax evasion of Rs25 million for a non-filer and Rs100 million for a filer.
It was stated that all arrests under the ITO would be made in accordance with the relevant provisions of the Code of Criminal Procedure (CrPC). The cases below these limits would be dealt with by the FBR as per routine practices.
Similarly, if a company is found involved in concealing revenues, then every authorised director and officer of that company would be held responsible for concealing revenues and could be arrested, according to the Finance Bill.
The Finance Bill also states that if a company officer is arrested for being responsible for concealing company revenue, the issue of tax liabilities, default surcharges and fines owed to the company would not be resolved.
The new powers were announced by Finance Minister Shaukat Tarin in the Finance Bill which was introduced in the National Assembly on June 11. On June 16, Tarin had told the Senate Standing Committee on Finance that the government wanted to use the powers to arrest only for deterrence.
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Tarin reiterated that power to arrest people on concealment of income would be retained, but added that such powers would be taken back from a Grade-19 assistant commissioner and instead to be entrusted to a committee, comprising he himself and the FBR chairman.
“The text of the Clause 203A does not reflect my intentions and I have asked the law minister to rewrite it,” Tarin had said while responding to criticism over allowing FBR assistant commissioner to arrest people on the suspicion of concealment of income.
“The FBR itself cannot do anything against the taxpayer and instead a third party will deal with the issue,” he said, adding that the government wanted to use the powers to arrest only for deterrence and did not intend to arrest more than 20 to 25 people.