The Federal Board of Revenue (FBR) has fortified its ability to gather information on incomes from industrial and commercial undertakings exempt from tax.
An amendment to the Income Tax Ordinance, 2001, specifically Section 180, updated up to June 30, 2021, grants the FBR the authority to authorize any department or agency of the Government to collect and compile data regarding exempt income. This development is a part of the broader efforts to streamline information collection and strengthen the tax administration system in Pakistan.
The revised Section 180 reads: “Power to collect information regarding exempt income.— The Board may, by notification in the official Gazette, authorise any department or agency of the Government to collect and compile any data in respect of incomes from industrial and commercial undertakings exempt from tax under this Ordinance.”
This amendment provides the FBR with a legal framework to delegate the authority to collect information on incomes from industrial and commercial entities that are exempt from tax. The information gathered will contribute to a comprehensive understanding of the landscape of exempt income, facilitating better policymaking and ensuring that the tax administration system remains responsive to the evolving economic scenario.
The authorization process outlined in Section 180 allows the FBR to delegate this information-gathering task to relevant government departments or agencies. This targeted approach ensures that the entities collecting data have the necessary expertise and resources to compile accurate and relevant information on exempt incomes.
The scope of exempt income includes earnings from industrial and commercial undertakings that are granted tax exemptions under the provisions of the Income Tax Ordinance, 2001. This category often includes entities that play a crucial role in the economic development of the country and are granted exemptions to encourage specific industries or sectors.
Industry experts have commended this initiative, noting that it represents a proactive step toward data-driven decision-making in tax administration. The ability to gather accurate and timely information on exempt income will enable the FBR to formulate targeted policies and ensure that the tax system remains fair and equitable.
This amendment aligns with international best practices, where tax authorities are increasingly relying on data-driven approaches to enhance efficiency and effectiveness. By empowering the FBR to collect information on exempt income, Pakistan is moving in line with global trends in tax administration.
The amendment to Section 180 of the Income Tax Ordinance, 2001, empowering the FBR to collect information on exempt income, signifies a commitment to modernize and strengthen the tax administration system in Pakistan. This development is expected to contribute to more informed decision-making and ensure that the tax policies align with the economic realities of the country.
