The member FBR while briefing the Senate Standing committee on Information Technology and Telecommunication said that besides withholding income tax, there are issues in sales tax as well and Rs 89 billion are still outstanding against the cellular companies. Though sales tax is currently being collected by the provinces and only they can comment, there may be still some issues, he added.
Currently FBR is in process of conducting the withholding income tax audit of telcos and based on the outcome and inference(s) drawn from the withholding income tax monitoring exercise (withholding audit), audit for the last five years of all telcos could be opened as per legal provision. If the same trend and results continue, tax evasion/discrepancies from Rs 80-100 billion could be found.
The FBR official said that FBR collects around Rs 48 billion WHT, to which the committee chairman Shahi Syed said that as per his calculations, the figure should be around Rs 113 billion. The FBR informed the committee in written that presently four mobile/cellular telephone companies - M/s Telenor Pakistan (Pvt) Limited, M/s Pakistan Mobile Communication Limited (Mobilink), M/s Telecom Mobile Ltd (Ufone) and M/s CM Pak Ltd (Zong) - are operating in Pakistan.
As per requirements of the Income Tax Ordinance, 2001, the telcos are deducting withholding income tax from millions of customers and, in the process, generating a massive volume of customers' transactions on daily basis. Further, the telcos are also required to collect sales tax (in the case of provinces) under concerned provincial sales tax laws whereas federal excise duty (in the case of Islamabad Capital Territory) is being collected under Federal Excise Act, 2005.
Considering the massive challenges involved in the analysis of millions of transactional data of withholding taxes of massive number of subscribers of each cellular company generated on daily basis, the FBR launched a pilot project for devising an IT-based mechanism for accessing subscribers' withholding transactional data for ensuring effective monitoring of withholding taxes by the telcos.
Under this pilot project, the FBR with the assistance of the Pakistan Revenue Automation (Pvt) Ltd (PRAL/IT Wing), was able to develop a software utility portal (/electronic). All the four telcos have been required to upload their monthly customers' transactional data on the prescribed format and requirements. For this purpose, necessary support and assistance was always sought from Pakistan Telecommunication Authority (PTA), the telecom regulator, whenever compliance issues arose.
This pilot project/mechanism has been enabled during the current financial year 2017-18 and all four mobile phone companies have been transmitting/uploading their customers' transactional data on to IT/PRAL provided interface every month since July 2017.
The aforesaid portal has enabled a more transparent and reliable customers' withholding tax data transmission to FBR and the position of subscribers' withholding taxes collected by all four cellular companies under section 236 of the Income Tax Ordinance, 2001.
In this connection, FBR's IT/PRAL team in coordination with the concerned Commissioner of Large Taxpayers Unit (LTU) remains in constant contact with the concerned telcos' technical/management teams to resolve outstanding issues relating to data harmonization and other data requirements as they arise during the process of data harmonization checks by the IT/PRAL team.
To start with, the final data earlier uploaded on the IT-based electronic data link by M/s Telenor Pakistan (Pvt) Limited was picked up for withholding income tax audit for the months of July to September 2017. The concerned field officers along with IT experts from IT/PRAL (FBR), comprising six members, started conducting field based withholding system audit of consumers' tax deducted and deposited under section 236 of the Income Tax Ordinance, 2001, for the quarter July-September 2017, at companies premises located at Telenor headquarters, Islamabad.
The initial data analysis reflected short deduction of tax of Rs 267 million, and the due proceedings under Income Tax Ordinance, 2001, in this matter are underway. Further the response from Telenor is awaited. Final outcome will be shared after conclusion of proceedings in due course of time.
The withholding income tax audit of other telcos would also be carried out after taking into account the outcome and inference(s) drawn from the withholding income tax monitoring exercise (withholding audit) of M/s Telenor Pakistan (Pvt) Limited. The committee also discussed the issue of action taken by Federal Investigation Agency (FIA) against M/s LMK Resources Pakistan Ltd, vendor of Capital Development Authority (CDA) for E-Services project as well as staff of CDA and National Information Technology Board who was found involved in violation of rules/funds embezzlement in the project.
The DG (admin) CDA said that hardware for the project implementation is ready, but LMKR failed to provide the software. The LMKR representative said that they are ready for providing the software. Deputy Director FIA Ejaz Ahmad Khan said that hardware was ready but LMKR failed to provide the software.
The committee directed for starting the implementation of the project from Friday (today) and directed the FIA to fix the responsibility on officials involved. It was further revealed that one officer of CDA Dr Athar Manzoor was involved who came from Canada and was hired as Consultant IT, who is at large now.
The committee also discussed the implementation status of recommendations made by it regarding increase in the pension of all the retired employees of Pakistan Telecommunication Company Limited (PTCL). The secretary of the IT Ministry said that several pensioners filed contempt petitions before high courts and Supreme Court regarding pension increase cases.
In Supreme Court, while hearing the contempt petitions regarding June 12 decision, the apex court on June 14, 2017 directed to submit compliance report within 60 days. On 15 September 2017 ie after court vacations, a compliance report was submitted before the apex court.
The aforesaid compliance report came up for hearing lastly on November 1, 2017, when the apex court directed to deposit arrears of remaining petitioners in the court within four weeks. The directions of the court have been complied with and around Rs 4.8 million were deposited. The committee expressed annoyance while saying that despite its recommendations for not going into review, the ministry went in review and increased the miseries of around 40,000 pensioners.