Home »Top Stories » FBR re-verifying all IT/WHT exemption certificates

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  • Apr 26th, 2017
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The Federal Board of Revenue (FBR) is re-verifying all income tax/withholding tax exemption certificates of Rs 118 billion issued at import stage during 2016-17 as compared to Rs 109 billion worth certificates issued in 2015-16. Sources said that the exemption certificates of Rs 109 billion were issued in 2015-16 at the import stage. So far, income tax exemption certificates of Rs 118 billion have been issued in 2016-17 for availing exemptions on imports. There is an increase of Rs 9 billion in issuance of tax exemption certificates during 2016-17.

The increased number of exemption certificates in 2016-17 has serious impact on collection of withholding tax at import stage. The revenue collection on this account has been decreased on imports due to large number of such certificates issued during the current fiscal year. The increase of Rs 9 billion in issuance of such certificates has promoted the tax authorities to re-verify the same. The Board has decided to revisit income tax/withholding tax exemption certificates issued during 2016-17. The FBR has already directed field formations to verify exemption certificates (section 148 of the Income Tax Ordinance 2001) issued by the field formations by constituting teams of senior tax officials in large taxpayer units (LTUs) and regional tax offices (RTOs) to conduct field visits for verification exercise across the country.

In this regard, the FBR had issued instructions to the chief commissioners of LTUs/RTOs to verify each exemption certificates issued by the field formations. According to the FBR, the chairman FBR pointed out during last chief commissioners' conference that a number of exemption certificates issued during the current fiscal year (2015-16) were much higher. Consequently, it has impacted the collection of taxes u/s 148 of the Income Tax Ordinance 2001. The chairman FBR and FBR member (IR operations) showed their concern in this regard and stated that due care should be exercised while issuing exemption certificates in accordance with the laid-down procedure. It was accordingly decided that the field formations shall be extra vigilant in issuance of the exemption certificates.

It was further decided that the chief commissioners shall submit a detailed report regarding cases where exemption has already been granted. For future, a team of officials headed by an officer not below BS-18 shall be constituted, which would conduct field visits for verification of the facts in each case where exemption has been sought. Names of team members shall be communicated to the board.

All exemption certificates must be issued in strict accordance with relevant provisions of law and SROs issued by the FBR. The FBR has also has expressed serious concern over massive misuse of exemption certificates at import stage. It was decided to take measures to cancel inadmissible certificates through verification exercise and ensure preventive measures to avoid such issuance of certificates in future.



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