Speaking as a guest in 'Paisa Bolta Hai' of Aaj News with Anjum Ibrahim here on Sunday, FBR Member and Spokesman Dr Muhammad Iqbal said, "We would try to introduce some system to simplify process for obtaining refunds, by those who are not liable to file returns but pay higher rates of withholding tax on different transactions."
Under the law, everyone, who intends to obtain refund, has to file return electronically. Obviously, the law has been specified for those having taxable income, but the same law is applicable to everyone. This is also applicable to cases of pensioners and students for which they have to get electronic registration with the FBR. Ideally, there should be a system to issue refunds to them under one-window operation.
Tax lawyer Waheed Shahzad Butt suggested that the budget (2017-18) introduce a one-widow facility for those seeking refunds in cases where persons are not liable to file returns and pay taxes. If the FBR wanted to maintain a difference between the filers and non-filers for the payment of withholding tax, the FBR should simplify procedure for the payment of refunds to those not liable to file returns.
The persons, who are not liable to file returns, should not go through the cumbersome process of enrolment/registration electronically.
He said that the difference between filers and non-filers should be maintained to ensure payment of taxes by those doing businesses but not registered with the tax department. However, it is unjustified to collect withholding tax from those who are not obliged to file income tax returns like students, housewives and pensioners. The Commissioner concerned having jurisdiction over non-filers must be empowered by the FBR to issue exemption certificates to those paying higher rates of withholding taxes, but not liable to file returns. The exemption certificates be issued to avoid deduction of tax from those not liable to file returns.
The FBR is getting revenue from non-filers, but such persons have included the amount of withholding tax paid in their cost of doing business. The FBR can easily collect data of non-filers from bank transactions where tax has been deducted as non-filers, Waheed Shahzad Butt added.
To a query, the FBR spokesman stated that two major policy initiatives have been implemented in the past. Firstly, real estate and stock exchanges were properly brought under the regime of capital gains tax. Secondly, higher rates of withholding tax have been collected from non-filers of income tax returns to increase their cost of doing business.
When asked why family unit cannot file return collectively, he said that every individual has to file return having taxable income under the law. In Pakistan, if all transactions are documented, it is easy to differentiate between the filers and non-filers.
About the Tax Directory of Parliamentarians, Dr Muhammad Iqbal said that the level of compliance has been improved following publication of tax directory of Parliamentarians every year. Since publication of tax directory, there is a substantial increase in contribution made by the Parliamentarians. The FBR is issuing Annual Tax Directories includes names of parliamentarians, corporations, Association of Persons (AoPs) and individuals. Tax Directory of Parliamentarians covers tax details of all Members of Senate of Pakistan and the National Assembly of Pakistan and the Provincial Assemblies. It is easy to pick non-filer Parliamentarians on the basis of filers mentioned in the tax directory, the FBR Member added.
Copyright Business Recorder, 2017