Section 21A of the Sales Tax Act, 1990 grants the Federal Board of Revenue (FBR) the authority to compile and maintain an Active Taxpayers List (ATL).
The amendment, incorporated through the Finance Act, 2021, reflects the FBR’s commitment to identifying and recognizing taxpayers actively contributing to the revenue stream.
Section 21A of the Sales Tax Act, 1990 reads as follows:
21A. Active Taxpayers List – The Board shall have the power to maintain an active taxpayers list in the manner as may be prescribed by rules, and such rules may provide for the restrictions and limitations to be imposed on a person who ceases to be an active taxpayer.
This provision grants the FBR the power to establish and upkeep an Active Taxpayers List, a dynamic roster of individuals and entities actively fulfilling their tax obligations. The ATL serves as a tool for the FBR to identify and acknowledge those contributing significantly to the national revenue.
The methodology and criteria for maintaining the ATL will be determined by rules prescribed by the FBR. These rules will outline the procedures for inclusion, maintenance, and potential removal from the active taxpayers’ list. Additionally, the rules may stipulate restrictions and limitations applicable to individuals or entities that cease to meet the criteria for active taxpayers.
The ATL is a vital instrument for tax authorities to streamline their processes, target enforcement measures, and incentivize compliance. Recognizing and rewarding active taxpayers not only strengthens the government’s revenue collection but also fosters a sense of accountability and fairness in the taxation system.
The amendment aligns with global trends where tax authorities increasingly leverage technology and data analytics to identify and engage with compliant taxpayers efficiently. By maintaining an up-to-date ATL, the FBR can optimize its resources, focus on high-priority areas, and enhance overall tax administration.
While the introduction of Section 21A is applauded for its potential to enhance tax transparency and encourage compliance, concerns have been raised about the need for clear guidelines and fairness in determining the criteria for inclusion or exclusion from the ATL. Striking a balance between incentivizing compliance and preventing undue restrictions will be crucial for the effective implementation of this provision.
Section 21A in the Sales Tax Act, 1990 signifies a strategic move by the FBR to modernize tax administration and recognize active contributors to the national revenue. The establishment and maintenance of an Active Taxpayers List are indicative of the government’s commitment to fostering transparency and efficiency in the taxation system. As the FBR moves forward with implementing the rules associated with Section 21A, clear communication and collaboration with taxpayers will be essential to ensure a fair and balanced approach to tax compliance and recognition.
