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Amends to laws introduced to improve tax compliance

Amends to laws introduced to improve tax compliance

ISLAMABAD: The government has introduced procedural amendments to tax laws through the Finance Bill 2014 to improve tax compliance.

As per official documents, the government has exempted from income tax the receipt of Pakistan Telecommunication Authority’s (PTA) income regarding the sale of spectrum licences.

An amendment is introduced to exempt the PTA’s income with retrospective effect from March 2014. “The income of the sale of spectrum licences will be the income of the federal government and not of PTA,” the amendment reads.

Official spokesperson for the Federal Board of Revenue (FBR) Shahid Husain Asad, said the tax department had collected the advance tax of 10 per cent from the auction of 3G/4G licences. “We have already collected Rs10.9 billion from the licence holders,” he added.

Through another amendment, the FBR can depute any officer on the business premises of the registered person to monitor production of taxable goods and stock position.

The government had already introduced a section 40(b) in the Sales Tax Act, 1990 but its operation was suspended in the wake of decisions of the appellate authorities.

The appellate authorities have interpreted that the provisions of 40(b) are linked with those of section 40 of the sales tax, whereby it is mandatory to obtain a search warrant from the magistrate for entering any business building.

Through the Finance Bill 2014 an explanatory provision was added in the section 40(b) of the Sales Tax Act 1990 that this section will be independent in its operation and was not linked with the section 40.

An amendment was introduced that chartered accountants of the cost and management accountants with 10 years of professional practice were made eligible to be appointed as accountant member of the Appellate Tribunal of Inland Revenue.

The government is also developing a computerised system to scrutinise sales tax returns in order to reduce interaction between taxpayers and tax collectors, and also to minimise discretion.

This e-scrutiny system will carry out all types of requisite checks and analysis objectively, and will issue electronic intimation to taxpayers so that they can correct their mistakes prior to initiating legal action by the department.

The system will also track taxpayers’ response and action taken by officers. It is therefore proposed to introduce legal provisions in the Sales Tax Act, 1990 for such computerised system to improve efficiency and prevent element of harassment to the taxpayers.