The Federal Board of Revenue (FBR) served nearly 13 million tax notices to non-filers in three years but just one out of every ten of them cared to respond, showing weakened writ of the tax machinery and also its highhandedness.
From fiscal year 2018-19 to 2020-21, the FBR served 12.8 million tax notices to non-filers of the income tax returns, the FBR informed the Senate Standing Committee on Finance on Wednesday.
However, only 1.31 million people filed their returns, showing compliance level of just 10.3% as against total notices served in three years. The FBR had raised Rs64.3 billion tax demand in these 12.8 million cases. However, it could recover just Rs2.6 billion, which was a mere 4% of the tax demand.
Headed by Senator Talha Mehmood of the JUI-F, the standing committee expressed serious reservations on sending nearly 13 million tax notices. It termed the FBR’s drive as an attempt to harass taxpayers and mint money from them.
Mehmood demanded that the tax officers who sent wrong notices should be put behind the bars.
The revelation come days after the national assembly authorised the FBR to arrest people on tax defaults of over Rs25 million in case of non-filers and Rs100 million in case of filers, subject to permission by the finance minister led committee.
The FBR’s tax notices increased corruption and officers who served undue notices should be given exemplary punishments, said Minister for Railways Senator Azam Swati.
Despite serving nearly 13 million tax notices, the FBR could increase the number of filers to slightly above three million from a level of around 1.7 million at the end of the Pakistan Muslim League-Nawaz (PML-N) term.
The FBR maliciously sent wrong tax notices to the people before close of every fiscal year to meet its annual tax targets, said Senator Mehmood.
FBR Member Inland Revenue Service operations Mohammad Ashfaq said that the FBR had only served the tax notices but did not register cases against these people. In other countries, taxpayers are arrested when they do not discharge their obligations.
Ashfaq said that out of 12.8 million tax notices served, majority of them did not respond to these notices. Many people who were also not required under the law to file their income tax returns were also wrongly served with the tax notices, the FBR admitted.
The finance minister says that the FBR has been stopped from giving tax notices but data speaks otherwise, according to members of the standing committee.
The FBR confessed before the standing committee that the taxmen were not angels but action has been taken against corrupt people.
The record submitted in the standing committee showed that in fiscal year 2018-19 - the first year of the PTI rule, the FBR served 2.1 million notices and only 172,342 of them filed their returns. They paid a paltry sum of Rs259 million against a tax demand of Rs9 billion.
In fiscal year 2019-20, 6.3 million tax notices were served and only 297,282 submitted their returns. They paid Rs669 million in taxes against a demand of Rs12.7 billion, according to the FBR.
In the just ended fiscal year, the FBR gave 4.3 million tax notices and 846,296 people submitted their returns, which was the highest compliance ratio of nearly 20%. The FBR raised Rs42.5 billion tax demand but received a meagre amount of Rs1.7 billion or 4% of the demand in last fiscal year.
As many as 11.5 million people did not respond to the FBR, which showed that the FBR had served these notices to harass the individuals, said Senator Musadiq Malik of the PML-N.
The chairman of the standing committee said that the FBR headquarter puts pressure on its chief commissioners before close of the fiscal year that results into undue harassment of the taxpayers.
The committee members observed that as compared to the first year of the PTI government, there was significant surge in tax notices served to the people, indicating growing harassment in the hands of the taxmen.
The FBR admitted that the tax notices were also withdrawn in cases where wrong notices had been served to the taxpayers.
No taxpayer has ever been sent to jail, said Mohammad Ashfaq. He said that based on the e-stamp data, received from the government of Punjab, the FBR served 10,000 tax notices.
Ashfaq claimed that there was not even corruption scandal in the FBR in the last fiscal year. He said that the FBR was part of the same society. When the society will correct its course, we will also be on right path.
However, the FBR appointed corrupt and notorious people at key positions in Karachi and they were not removed despite serious complaints against them, sources told The Express Tribune. These people openly claim before the businessmen that they enjoy blessing from the top, said the sources.
The FBR informed the standing committee that about Rs1.34 trillion were due against 683,141 people and companies and the FBR has served them notices to correct their returns submitted with the tax machinery.
It complained that the judicial process was very slow and it takes at least one year to unlimited time to decide these tax matters. Ashfaq said that out of Rs1.4 trillion, about Rs61 billion recoveries were made till June this year.
Published in The Express Tribune, July 8th, 2021.
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FBR has sent a tax notification to me even though i am a non resident Pakistani and it s clearly mentioned in my profile. I havw voluntarily filed a tax return as Overseas Pakistani but next year the FBR issued me a notice to file normal tax which even stops me to file a non-resident tax return. Hence FBR need to improve their notifications and system.