Karachi, November 30, 2023 – The Federal Board of Revenue (FBR) has announced extended working hours for Inland Revenue offices on Thursday.
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IR Intelligence Karachi Successfully Prevents Escape of Mastermind in Fake Invoice Mega Scam
Karachi, June 16, 2023 – The Directorate of Intelligence and Investigation (I&I) of Inland Revenue (IR) in Karachi has made a significant breakthrough in the fight against the mafia involved in fake and flying invoice scams.
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Supreme Court discourages taxpayers seeking relief in show cause notices
Supreme Court of Pakistan (SCP) in a landmark judgment dated September 30, 2022 stopped the practice of taxpayers approaching courts for legal remedy in those cases where only show cause notices are issued provided no coercive action has been taken by tax authorities.
In a civil petition No. 1693-L of 2022, three-member bench comprising Justice Qazi Faez Isa, Justic Yahya Afridi and Justice Jamal Khan Mandokhail, the Commissioner Inland Revenue, Lahore as petitioner pleaded the apex court to set aside the judgment of Lahore High Court in writ petition No. 64… of 2021.
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The council of the petitioner submitted that no order had been passed by the Inland Revenue against the taxpayer (respondent). The council further apprised the court that only a show cause notice (dated October 01, 2021) was issued, which the taxpayer assailed before the high court and did no, without even filing a reply to the said show cause notice.
The council of the petitioner stated that taxpayer was not an aggrieved party under Article 199 of the Constitution of Pakistan. The article can only be invoked when ‘no other adequate remedy is provided by law’, but in the instant case there was a remedy provided by law in case an order was passed against him (taxpayer).
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The council for the taxpayer contented that the tax office issued the show cause in complete violation of the applicable procedure. This was the reason that taxpayer approached the high court. The council further declared the show cause as discriminatory.
Justice Qazi Faez Isa, wrote the order and disposed of the petition with following remarks:
“Inland Revenue may proceed on the basis of the show cause notice dated October 01, 2022 or substitute such notice with another, if it so deems necessary, however, in either eventually adequate time will be provided to the respondent No. 1 [taxpayer] to file a reply thereto, if he elects to do so, wherein he may take all available grounds including the ground of discrimination and an opportunity of a hearing shall also be provided to him whereafter the matter shall be disposed of in accordance with the law.”
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According to the order, the petition was converted into an appeal and allowed by setting aside the impugned judgment of the high court dated February 28, 2022 and by directing that the matter be dealt with in the aforesaid agreed terms in accordance with the law.
The judgment of the apex court will help the tax officials to continue proceedings against taxpayers under relevant tax laws. It has become observed in many cases that taxpayers approach court where only show cause notices were issued and no further action was taken under the tax law.
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IR offices to work on Saturdays for revenue target
ISLAMABAD: The Federal Board of Revenue (FBR) on Tuesday said that all the offices of Inland Revenue (IR) will work on Saturdays to meet the revenue collection target.
The FBR in an official memo said that in order to enhance the efforts to meet the revenue target for the current financial year 2021/2022, all field formations will remain open and observe normal working hours on Saturdays with effect from February 12, 2022 till further orders.
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The FBR directed the Chief Commissioners IR to ensure that COVID-19 preventive SOPs are strictly followed.
So far the FBR has successfully maintained momentum of its growth trajectory in revenue collection.
According to the provisional figures FBR collected net revenue of Rs 3,352 billion during July, 2021 to January, 2022 of current Financial Year 2021-22, which has exceeded the target of Rs 3,090 billion by Rs 262 billion. This represents a growth of about 30.4 per cent over the collection of Rs. 2,571 billion during the same period, last year.
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The net collection for the month of January, 2022 realized Rs. 430 billion representing an increase of 17.2 per cent over Rs 367 billion collected in January, 2021. These figures would further improve before the close of the day and after book adjustments have been taken in to account.
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On the other hand, the gross collections increased from Rs 2,705 billion during July, 2021 to January, 2022 to Rs 3,533 billion in current Financial Year July, 2021 to January, 2022, showing an increase of 30.6 per cent.
Likewise, the amount of refunds disbursed was Rs 182 billion during July, 2021 to January, 2022 compared to Rs 134 billion paid last year, showing an increase of 35.9 per cent.
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IR intelligence conducts two raids against tax evasion
ISLAMABAD: The Intelligence and Investigation of Inland Revenue (IR) has conducted raids in Lahore and Multan against entities involved in tax evasion, said a statement issued by Federal Board of Revenue (FBR) on Thursday.
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Budget 2021/2022: Inquiry powers of Commissioner Inland Revenue withdrawn
ISLAMABAD: The federal government has withdrawn the discretionary powers of conducing inquiry in certain tax matters by Commissioners Inland Revenue.
Finance Minister Shaukat Tarin while presenting budget 2021/2022 on Friday announced curtailing the discretionary power of the tax authorities.
He said that the discretionary powers of the income tax authorities are proposed to be curtailed:
(1) Tax authorities can conduct inquiry in certain matters regarding amendment of assessment without selection of case for audit. The power to conduct inquiry is proposed to be withdrawn;
(2) Time limit for disposal of show cause notices is proposed to be 120 days; and
(3) The power of the commissioner to reject advance tax estimates has also been proposed to be withdrawn.
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FBR starts harmonizing Inland Revenue codes to simplify tax laws
ISLAMABAD: Federal Board of Revenue (FBR) has started harmonizing Inland Revenue codes in order to simplify and consolidate the tax laws, sources said on Wednesday.
The harmonization of IR codes has been started under World Bank funded ‘Pakistan Raises Revenue Project’. The FBR said that it had received financing from the World Bank towards the cost of the Pakistan Raises Revenue Project, and intended to apply part of the proceeds for consulting services.
The FBR said the government of Pakistan is implementing a reforms program to mobilize domestic revenues to finance its development vision.
This program is being financially supported by the World Bank through a Pakistan Raises Revenue Project (PRRP). The overall objective of the Project is to “contribute to a sustainable increase in domestic revenue by broadening the tax base and facilitating compliance”. The duration of the implementation of project is five-years (2020-2024).
The FBR, with support from the World Bank, is currently undertaking a project for harmonization of the existing tax laws administered by the Inland Revenue Service of the Board, including but not limited to the Sales Tax Act, 1990, Income Tax Ordinance, 2001, the Islamabad Capital Territory (Sales Tax on Services) Ordinance 2001, the Capital Value Tax levied under Section 7 of the Finance Act 1989 and the Federal Excise Act, 2005 with the objective to harmonize the existing laws to the extent possible in order to provide ease of compliance and implementation and to bring certainty into their application.
Inland Revenue Service working under the FBR is responsible for administering tax laws pertaining to levy, assessment and collection of all Federal Inland Taxes.
Over the years, a harmonization process for the three main Inland Revenue laws, i.e. Sales Tax Act, 1990, Income Tax Ordinance, 2001, the Islamabad Capital Territory (Sales Tax on Services) Ordinance 2001, the Capital Value Tax levied under Section 7 of the Finance Act 1989 and the Federal Excise Act, 2005 has continued in order to align the provisions of the four enactments with each other and to provide uniformity and ease of implementation/compliance for the tax collectors and the taxpayers.
The next milestone in the on-going reforms and continuance of the process of streamlining of Inland Taxes is the transition to a harmonized Inland Revenue Code by integrating the existing four laws.
Consulting services are required for drafting of the harmonized Inland Revenue Code including legislative drafting along with stakeholder consultation.
The administrative and machinery provisions will be common for all the three tax laws. This component of the proposed Code would include provisions relating to record keeping, registration and returns, audits and investigations, tax arrears, penalties (both civil and- criminal) for a taxpayer’s failure to comply with his obligations, recovery of monies owed to the government, internal investigations, the legal rights of taxpayers (including appeals), redress processes and dispute settlement.
On the other hand, the charging and substantive provisions will be unique for each tax in conformity with their distinguishable character and essence. In addition to reorganization of the existing legal provisions, the exercise will provide an opportunity to simplify and consolidate the tax laws where the laws have become cumbersome and complex.
This initiative will reflect aspirations of taxpayers to have a simple tax law, provide ease of doing business, meet the demands of both bilateral and multilateral development partners, as well as vividly crystallize the government’s vision of a fresh-look tax system.
The foregoing factors demand initiating the process of writing of a harmonized Inland Revenue Code as early as possible so that it can be publicized for general feedback and comments before becoming the part of the next Finance Bill.
FBR seeks the services of a consulting firm, which shall lead all aspects of the assignment of drafting the new legislation.
The Assignment has the following components:
(a) To review existing analytical work and recommendations from government’s and development partners’ initiatives from recent past;
(b) to engage in a structured consultative process with the management of the Board, to comprehend overall vision and objectives for this assignment, and to design a roadmap for achieving the desired objectives;
(c) to structure the drafts in a manner that it has common administrative/machinery provisions for all tax types and separate charging/substantive provisions for each tax type;
(d) to discuss and analyze the implications of the recommended unified tax code for the organizational structure of the FBR and IRS;
(e) to prepare and submit the draft legislation to the Board for its review and approval;
(f) to conduct stakeholders’ consultations, including FBR field offices, the taxpayers’ association or similar organizations, and incorporate their views, before submitting the drafts for legislative processing.
(g) to assist the FBR in the legislative process by attending the meetings of the Parliamentary Committees, if so, required by the FBR; and
(h) to work with FBR to design and conduct communication and awareness campaigns (internal and external), after the promulgation of the legislation.
The FBR has invited Expression of Interest (EOI) from consulting firms by March 05, 2021.
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Member IR Operations receives complaints himself to eradicate corruption
ISLAMABAD: Member Inland Revenue (Operations) will directly receive complaints against corruption in order to provide secure channel of lodging complaints and in this regard SOP has been devised for handling of complaints.
The Circular No. 10 of 2021 – Operations issued on Monday, stated that in order to allay the fears of business community and citizen taxpayers, a convenient, and protected mechanism of filing complaints against corruption is being devised whereby all complaints would be received by Member IR Operation himself on an especially dedicated cell phone +92-0345-5555507; the cell phone would be in his own possession, exclusively.
“The complaints would be opened, acknowledged, and treated as per law in a highly confidential manner.”
The identity of the complainants would be immediately masked and encoded to safeguard them against any undue consequences.
The standard operating procedure (SOP) for lodging and handling of complaints against field functionaries is as under:
i. Complaints would be lodged through text message at cell No.. +92-345-5555507 – on Whatsapp, preferably.
ii. In Whatsapp text option, the complainant would identify himself by writing his name, address, CNIC the case particular and his cell phone number.
iii. The complainant would write the name(s) of the official(s) against whom the complaint is directed along with his/their designation, place of posting, and any other particulars, if available.
iv. The complaint must be supported by some evidence such as audio or video recording, text message exchange with the FBR functionary or any other documents, which could be attached with the text message, or subsequently sent by hard mail. If no such evidence is readily available, and affidavit on a legal paper, clearly spelling out the allegation and the person against whom the allegations are leveled would suffice.
v. Upon receipt of the complaint, a code number would be allotted to each complainant and his back-end identity data would be hidden beyond the access of field officers. This code number would help a complainant track progress on his complaint and the outcomes on it.
vi. Depending on the nature of the complaint and the evidence provided, the matter would be taken to logical consequence in the shortest possible time.
vii. Non-specific, unsupported or generalized complaints may not be processed.
The FBR said that taxpayers could not lodge complaints of corruption, rent-seeking and unethical conduct against any FBR functionary without any fear of reaction or revenge. However, in order to maintain the integrity of the system and achieve its intended objectives, the complainants would not level generalized allegations, and instead, file solid complaints, duly supported by evidence, and affidavits against the delinquent functionaries so that the malaise of corruption could be eliminated from the revenue functions of the state.
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IR offices work on Saturday for collection target
ISLAMABAD: The offices of Inland Revenue shall observe Saturday February 27, 2021 as normal working day in order to achieve revenue collection target for the month.
In a notification issued on Thursday, the FBR said that all Large Taxpayers Offices (LTOs), Medium Tax Office (MTO), Corporate Tax Offices (CTOs) and Regional Tax Offices (RTOs) would remain open and observe normal working day on Saturday, February 27, 2021 to facilitate the taxpayers in payment of duty and taxes. However, extended working hours till 8:00 PM will be observed by officers / officials who are monitoring incharge of collection of duty and taxes.
The FBR directed Chief Commissioner Inland Revenue to establish liaison with State Bank of Pakistan and authorized branches of National Bank of Pakistan (NBP) to ensure transfer of tax collection by these branches on February 27, 2021 to the respective branches of the SBP on the same date so as to account for the same towards the collection for the month of February 2021.