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Tag: FTO

  • FTO orders recovery from IR officers in unlawful bank account attachment

    FTO orders recovery from IR officers in unlawful bank account attachment

    ISLAMABAD: Federal Tax Ombudsman (FTO) has ordered recovery from officers of Inland Revenue Officers in a case of unlawful recovery through bank attachment of a taxpayer.

    The FTO ordered dated May 21, 2019 in a complaint filed by a taxpayer against unlawful recovery of tax demand from the bank account of the complainant outstanding against a private limited company, and undue delay in refunding the same.

    The complainant also sought for award of cost and compensation along with additional payment for delayed refund.

    The complainant as an individual assessed to tax at Regional Tax Office (RTO) – III Karachi. According to the taxpayer, the Inland Audit Officer Unit 2 Haripur, RTO Abbotabad, without considering the fact that the complainant was assessed to tax at, RTO-III Karachi against whom no tax demand was outstanding and without serving on him any prior notice, illegally attached his bank accounts and recovered Rs1.714 million.

    The findings of the FTO in this case showed that administrative excesses for improper motives, neglect, inattention, delay, incompetence, ineptitude and inefficiency in the discharge of duties and responsibility and as a consequence unlawful recovery of tax liability outstanding against a private limited concern from the bank account of the complainant tantamount to maladministration.

    The FTO directed the FBR to:

    i. recover Rs0.45 million from Muhammad Asghar Khan Niazi, Zonal CIR, RTO Abbottabad and Hafiz Muhammad Rafaqat, IAO, Unit RTO Abbottabad (costs and compensation) in equal shares and arrange to pay the same to the complainant;

    ii. fix responsibility regarding administrative excesses neglect, inattention, delay, incompetence, ineptitude and inefficiency in the administration or discharge of duties and responsibility and initiate appropriate disciplinary proceedings against the officials found accountable;

    iii. direct the commission – IR concerned to issue additional payment for delayed refund to the complainant.

  • FTO directs audit of all manufacturers for misusing SRO 1125

    FTO directs audit of all manufacturers for misusing SRO 1125

    ISLAMABAD: Federal Tax Ombudsman (FTO) has directed Federal Board of Revenue (FBR) to conduct audit of all manufacturers who availed the benefit of SRO 1125(I)/2011.

    In its suo moto action related to misuse of zero-rated sales tax facility under SRO 1125(I)/2011 the FTO detected systematic flaws and directed, through an order dated May 15, 2019, the FBR to take following measures:

    — develop a comprehensive risk management framework in the working of IRIS based sales tax registration rules and revisit the approved risk engine and scores to mitigate the possibility of any misuse of ‘manufacturer status’ by the registered persons;

    — “arrange audit of all manufacturers who availed the benefit of SRO 1125(I)/2011 to find out whether ‘manufacturer status’ was granted after fulfillment of requisite conditions and in cases of irregular approvals of manufacturers status fix responsibility on the dealing staff for proceedings under E&D Rules and take necessary measures under law/rules for recovery of losses caused to government revenues;

    — direct PRAL and Directorate of Reforms and Automation (Customs) to develop and implement system/software for live data synchronization with WeBOC regarding sales tax registration to ensure blacklisted and suspended taxpayers are not able to import and get undue benefit of SRO 1125(I)/2011; and

    — to direct all commissioners to conduct half yearly physical verification of all units registered in their jurisdiction as ‘manufacture’ to verify existence of manufacturing facility of all such units.

    The FTO also directed the FBR to submit quarterly implementation report.

    In the misuse of the SRO, the findings of the FTO observed that the review of sales tax registration rules and risk score weightage assigned to the risk parameters employed in the registration process which lead to misuse of ‘manufacturer’ status by registered persons for the purpose of tax evasion.

    The FTO further observed that the FBR vide SRO 494 (I)/2015 dated June 30, 2015 showed that the IRIS based Sales Tax Registration module failed to timely incorporate the provisions of revised registration rules.

    “The requisite changes in IRIS were incorporated after nine months vide SRO 227(I)/2016 dated March 21, 2016.”

    The FTO observed that the FBR had failed to take timely action in integrating the registration modules in IRIS system thereby providing opportunity to the unscrupulous elements to take advantage of the weaknesses in the registration procedure of the sales tax department.

    “Moreover, modification in the registration module was carried out after nine months of the revision of sales tax registration rules, but evidently no exercise was carried out by the field formation to verify that the existing manufacturers were registered in conformity with the provisions of revised rules.”

    The FTO mentioned two cases i.e. M/s. Aran Mart International and M/s. Venus & Co. where FBR had failed to monitor their transactions and took belated action to recover short levied government dues.

    In its case specific recommendations, the FTO asked the FBR to direct the Directorate General Intelligence and Investigation to:

    a. conduct detailed investigation to find out real owners of M/s. Aran Mark International by interalia utilizing information available in customs clearance documents and instruments used for payment of import duties and taxes; and

    b. recover the amount of illegal concessions availed by M/s. Aran Mart International uder the law/rules; and

    c. ascertain IR staff responsible for approving ‘manufacturer status’ of M/s. Aran Mart International either through collusion or failure to take precautionary measures for protection of government revenue for taking disciplinary action under E&D Rules and for recovery under the law/rules; and

    d. initiate criminal proceedings against the owners of M/s. Aran Mart International along with those delinquent tax functionaries who deliberately and with ulterior motive connived to approve the ‘manufacturer’ status of M/s. Aran Mart International.

    The FBR has also been asked to direct the Chief Commissioner IR, Corporate RTO Karachi to recover from M/s. Venus & Co. sales tax amounting to Rs32.799 million and further tax of Rs8.7 million assessed by the department.

    The FBR has been further asked to direct the Directorate of Intelligence and Investigation (Customs) to investigate and fix responsibility of clearance of import after suspension of STR of the M/s. Aran Mart International.

  • FTO recommends 20 percent increase in withholding tax rates

    FTO recommends 20 percent increase in withholding tax rates

    KARACHI: Federal Tax Ombudsman (FTO) has recommended 20 percent increase in adjustable withholding taxes in order to encourage income tax return filing.

    However, this deduction of withholding tax should not apply on salary income, the FTO said in its recommendation for federal budget 2019/2020.

    In order to encourage taxpayers to e-file income tax returns for claiming adjustment of adjustable withholding taxes, it was proposed that gradually all adjustable withholding taxes, excluding those on salary income, might be enhanced by at least 20 percent in the coming budget.

    The FTO also proposed that all current non-adjustable withholding taxes may be converted into adjustable withholding taxes by amending the relevant provisions of the income tax laws/rules.

    Further, in order to provide rights to taxpayers, the FTO said that a taxpayer should be given the right to approach the commissioner for the revision of assessment, as was available under original Section 138 of the Income Tax Ordinance, 2001.

    The FTO further suggested that income from pension was exempted from income tax, but pensioners were not eligible to avail benefits of provisions of withholding tax unless they were on active taxpayers list. It was therefore proposed that pensioners deriving income from pension only, be exempted from the provisions of withholding taxes applicable to non-filers.

  • FTO takes suo moto notice in concealing income in garb of agriculture tax, Iranian oil sale

    FTO takes suo moto notice in concealing income in garb of agriculture tax, Iranian oil sale

    ISLAMABAD: Federal Tax Ombudsman (FTO) has taken suo moto notice and initiated investigation in open sale of Iranian oil in Balochistan and tax evasion in the garb of agriculture tax.

    The annual report 2018 issued by the office of FTO, stated that during the year the FTO proactively invoked powers to take action on own motion notices.

    It said that own motion investigation was initiated in the phenomenon of open sale of Iranian petroleum products in Balochistan at the petrol pumps. Proceedings were in progress, it added.

    Another own motion investigation was started in the phenomenon of tax evasion in the garb of agriculture tax. Since long, a large number of taxpayers have been showing a substantial portion of their income as agriculture income.

    “As tax on agriculture income was a provincial subject, so they were paying income tax to Federal Board of Revenue, on the income declared other than agriculture sources.”

    “While, at the same time they were not paying agriculture tax to the provinces,” the FTO report said, adding that on pointation by the FTO, the FBR had started sending notices to the defaulters.

    The FTO in another own motion investigation of a case of smuggling of mobile phones, mis-declared as LED lights, and cleared through green channel of WeBOC system, was undertaken as a suo-moto case and suitable recommendations were made.

  • Alvi praises FTO role in resolving taxpayers’ complaints

    Alvi praises FTO role in resolving taxpayers’ complaints

    ISLAMABAD: President of Pakistan Dr. Arif Alvi has praised the role of Federal Tax Ombudsman (FTO) for resolution of aggrieved taxpayers’ complaints.

    The president said this while talking to Federal Tax Ombudsman, Mushtaq Ahmad Sukhera, who called on him at Aiwan-i-Sadr on Monday.

    FTO also presented the annual report (2018) to the President.

    The President expressed his satisfaction on the decreasing number of representations against the recommendations of FTO.

    He appreciated the launching of e-based Complaint Management Information System(CMIS), which provides paperless office environment.

    He lauded FTO’s efforts for starting focused SMS and email campaigns to reach out to taxpayers.

    Moreover, he commended FTO for the development of a system for registration of complaints through android based hand-held devices.

    He highlighted that video link of FTO with Regional Offices is a step in right direction to eliminate time and space barriers.

    He stated that integration of FTO’s CMIS with FBR will improve its efficiency.

    He emphasized that there is a need for further steps for creation of awareness about the efficacy of the forum.

    He assured his support to the institution in the discharge of its duties and function.

  • Refund should have no nexus with revenue targets: FTO

    Refund should have no nexus with revenue targets: FTO

    ISLAMABAD: The office of Federal Tax Ombudsman (FTO) has advised Federal Board of Revenue (FBR) to set its targets rationally and refunds should have no nexus with revenue targets.

    “To link accountability to performance, compensation for delayed refund be ensured as delay has its own cost,” the FTO office said in its suggestion for budget 2019/2020.

    Refunds data should be placed on website, showing chronological sequence of status and settlement.

    It further said that the collection of Customs duty on challans, in advance, for the sake of targets, should be stopped. It also said that regulatory duties kill economic activity.

    Instead of more focus on the rates of taxes, FBR should pay more emphasis on stimulation of economic activity.

    Recommendations of separate Customs and IR Board given in ISAF Container scandal should be implemented, it said.

    The above mentioned suggestions were sent to Chairman FBR with the note that FTO’s office regards proposals worthwhile to be considered at the time of next budgetary exercise.

    As part of annual consultation to provide well thought-out advice, from a common citizen as well as expert perspective, to the FTO and FBR, meeting of the Rawalpindi/Islamabad based members of Advisory Committee was held in the Conference Room of the FTO office on December 27, 2018.

    The Federal Tax Ombudsman welcomed the participants and briefed them about the purpose of meeting which was to give recommendations for improvement in system and proposals for next budget.

    The conference was attended by Salman Nabi, Former Chairman, National Tariff Commission, Muhammad Sulaiman Khan, Ex-Member Customs and Former Advisor FTO Secretariat, Zaheer-u-Din Dar, Consultant, Zikria A. Zia, Resident Director AGE Cables, Muhammad Siddique, Former Advisor, FTO Secretariat, Najeeb R. Abbasi, Advocate High Court, Shabaz Rana, Economic Correspondent, The Express Tribune, Muhammad Azeem Siddiqi, Bureau Chief, Khyber News, M. Naeem Siddiqi, Chairman ST, IT and FBR Affairs Subcommittee.

    Tariq Ahad Nawaz, Advisor (Research) FTO Office, apprised the audience about the efforts made by the office of the FTO in the area of recommendations sent to FBR for streamlining the systemic issues and performance of the FTO office.

    In the open house discussion, the debate resulted in some very useful recommendations for improvement of the system.