Base broadening measures in next fiscal year’s tax plan

ISLAMABAD: The government is mulling to launch easy schemes in the upcoming budget for bringing in new taxpayers, Dawn has learnt from knowledgeable sources.

The new schemes will be fined-tuned in the next couple of days before being presented in the cabinet meeting for approval.

As part of the proposed schemes, it has been decided to register all those people who did not exist on the tax rolls from July 1, 2019. Under the proposed scheme, these individuals will have to approach Nadra e-Sahulat centres for registration as taxpayers with the Federal Board of Revenue (FBR).

After filling up one-page registration form with basic information, the e-Sahulat centres will help a person to get his taxpayer number. Currently, people approach selected FBR offices for getting National Tax Numbers (NTNs) involving cumbersome procedures.

But contrary to this, there are 10,000 to 12,000 e-Sahulat centres of Nadra across the country. This will facilitate more people in getting NTNs easily. “We are also considering various options to offer fixed tax rates to individuals for encouraging them to come under the tax net,” a senior tax official told Dawn.

As part of the scheme, the official said no question will be asked from such people about their past incomes. However, the scope of the scheme has not been finalised.

FBR has received 1.9 million income tax returns in tax year 2018 which is the highest in the country’s history. The revenue body plans to enhance the total tax returns filers to 5m by 2022-23.

A senior tax official told Dawn that the FBR has also started seeking information from commercial banks about details of withholding statements. The duration of the details will be from January 2018 until today. “We are expecting this data in a couple of weeks,” the official said.

The commercial banks will provide depositors data along with their CNIC number. “This will help the FBR identify those people who are not in the tax net,” the official said. The commercial banks are also withholding agents which withhold tax of depositors and submit the same with the FBR.

But now the FBR wants to get details of the depositors on the basis of their CNICs.

Meanwhile, using database analysis of withholding statements, 74,321 active live business cases have been identified with their CNIC details sent by FBR to Nadra for addresses. In this regard, 1,024 notices under Sections 114 and 116 have been issued in the first batch.

As per the second proposed scheme, it has been decided in principle to introduce a scheme for small taxpayers at the federal capital territory. Under the scheme, a fixed tax regime will be introduced for small shopkeepers in Islamabad as part of pilot project.

A single pager return form will be introduced for the fixed schemes as well. The return form will be simplified with basic information.

As per the scheme, the tax rates will be based on certain benchmarks such as the shop size, area, type of business or turnover. However, the scheme will be limited to small shopkeepers.

The mode of payment will be either through token or in some other manner. The shopkeepers will be asked to display tokens on shop premises at a visible place in order to avoid harassment by tax officials. The token will serve as a proof that the business is tax compliant.

In the recently passed Finance Supplementary (Second Amendment) Act, 2019, the government has already introduced a special clause in the Income Tax Ordinance, 2001, empowering the federal government to prescribe special produces for scope and payment of tax, filing of return and assessment in respect of such small traders and shopkeepers in such cities or territories as may be specified.

The proposal for fixed tax regime, based on shop size, was initially floated in a tax reform commission report headed by Syed Masood Naqvi. The report was submitted to the government in February 2016, however, the proposal failed to materialise.