Government decides to make Benami Act operational

ISLAMABAD: The government has decided to operationalise the Benami Act for seizing bank accounts and properties which will be detected in the name of others and will be sold out under the law, FBR’s Member Inland Revenue Service (IRS) Operation Seema Shakil and Member IRS Policy Hamid Ateeq Sarwar told a press conference.
The FBR has now requested the government to revise downwards its target but so far the annual target remains at Rs4,398 billion for the current fiscal year. The FBR’s provisional collection stands at Rs2,060 billion against the desired target of Rs2,251 billion for the first seven months (July-Jan) period, indicating a shortfall of Rs191 billion.
“The government has taken a decision to make the Benami Act operational as Parliament approved the law during the tenure of the last regime. We have now forwarded framed rules to the Ministry of Law for vetting them. By making the harsh law operational soon, all those bank accounts and properties kept in the name of others will be seized and then the tribunal will decide the process of sale of confiscated bank accounts and properties under the Benami Act,” the officers said.
When asked about the establishment of high-powered Tax Commission to consider proposals to shift the GST collection on services from provinces to the Centre, taxing agriculture income and placing a unified valuation rates for properties, the FBR members said the National Tax Collection Agency could provide the solution. He cited the examples of India, EU, USA and said the collection of GST on goods and services needed to be harmonised. They presented the examples of multinational companies where it could become hard to treat them as goods or services. “The solution is to establish a single tax authority,” he added. He said the provinces objected to capital gains collection by the Centre and they might take up this issue in the upcoming NFC meeting scheduled to meet tomorrow (Feb 6).
To another query about jacking up the valuation rates on property, he said the valuation rate notified by the FBR is still at 60 percent compared to the existing market rates and hiking them would not negatively affect the real estate business. The FBR’s Member IRS Operation Seema Shakil said the tax collection fell short of target because of the incentives provided by the last regime for the salaried class as the taxable limit was increased from Rs0.4 million to Rs1.2 million per annum, massive reduction in utilisation of the Public Sector Development Programme (PSDP), suspension of withholding tax on mobile usage and keeping GST on POL products on the lower side. She said the GST on POL products is now being brought at the standard rate of 17 percent. The sales tax on POL products at the import stage has been decreased by Rs43 billion so far.
The FBR’s Member IR Policy, Hamid Ateeq Sarwar, said the FBR is projecting a revenue loss of Rs106 billion at the existing price and tax rate on the POL products during the whole financial year 2018-19. Now the Petroleum Development Levy (PDL) was also jacked up in January 2019 on a per litre basis as there is a limit on upper ceiling of Rs30 per litre at the moment and there is space available to increase it further. The FBR members made a point that the tax collection through withholding tax decreased to Rs511 billion in July-Jan period of the current fiscal compared to Rs552 billion in the same period of the last fiscal year, so the withholding tax declined by Rs40 billion and the share of the withholding tax came down.
On the other hand, the tax collection went up through the revenue efforts undertaken by the tax machinery as in January it witnessed an 18 percent growth. Through valuation of property, the FBR’s collection stands at Rs12 billion in the first 7 months of the current fiscal against the same level of collection in the same period of the last financial year. They said 10 percent collection could be generated through revenue efforts of the FBR and keeping in view the track record of the tax machinery, it could collect Rs400 billion through their efforts out of the total fixed target of Rs4,398 billion. The FBR utilises Rs0.67 paisa for collecting taxes worth Rs100 and the share of IRS expenditure comes down to 0.30 paisa in the overall collection of the FBR. The FBR has only 300 officers for conducting audit, he said and added the capacity constraints were hampering the possibility to move ahead with an effective audit. He said the FBR sent out notices to 6,000 high net worth individuals and in 204 cases the FBR generated tax demands of Rs6 billion out of which it has so far recovered Rs2.6 billion. They said the FBR would not harass those who availed themselves of the amnesty scheme. The FBR obtained information from the OECD mechanism from 26 jurisdictions but the field formation did not have information as to who availed the last amnesty scheme. When someone declared less but possessed more, he will have to explain undeclared assets before the tax authorities. The FBR officials said there would be no discrimination against anyone under the tax laws.

Print Friendly, PDF & Email
Bookmark the permalink.

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.