LAHORE: Assistant Commissioner Inland Revenue Zone VI, Corporate Regional Tax Officer (CRTO) Bahawal Shahryar, has said it is high time that fast pace of technological progress and emergence of new markets should lead to a more unconventional and cutting-edge approach by the taxmen of the country.
Bahawal currently holds the jurisdiction of the Non-Profit Organizations (NPOs), NGOs, Trusts and charitable institutions working within the district of Lahore. The charge includes both monitoring of withholding taxes by this sector and more importantly involves complete investigation required for the approval of such institutions as an NPO under Section 2(36) of the Income Tax Ordinance-2001. The task is also sensitive as in the garb of NPOs, there might be cases where money laundering is involved and funds brought in through unidentified channels are not being used for terrorist financing or other such activities.
Prior to this, Bahawal has also monitored the marriage halls and banquet halls and collection under Section 236 D of the Income Tax Ordinance. It is an undocumented sector and deterrence measures normally require raids to be conducted on the premises of banquet halls and event managers to monitor that due tax. He conducted 34 raids during his posting in this sector and recovered nearly Rs08million as a result.
Talking about the changing nature of economy, Bahawal says the FBR is on the right track towards increased automation, but still a lot needs to be done. The IRIS software in operation since the last couple of years has been a positive development in this regard. However for the present day taxman to be effective, data is everything. The FBR is currently bent upon achieving a paper-free environment.
This cannot be hundred percent possible for a taxation department in a developing country, but still it is crucial to have efficient data analysis tools in place which can cross-examine returns, accounts and all kinds of electronic records existing in the FBR’s data base and produce instant results for the taxman for improved decision making. Furthermore, electronic sharing of data and access between all kinds of regulatory bodies of the country is also essential.
With the CPEC project right at its takeoff stage, the tax department has to be reshaping itself quickly looking for new avenues for increased tax collection, hence multiplying the revenue generation several times. This requires an out-of-the-box approach. Already the inflow of funds for various projects in this regard has been a good source of tax collection through withholding on payments under section 152 of the Income Tax Ordinance where non-resident companies are involved in service provision. The economy is on the right track.
FBR has made a significant progress in terms of increasing filers and broadening its outreach during the last couple of years. The focus should now be on taxing the undocumented sector of the economy. This sector is paying taxes indirectly through withholding on various transactions, however a breakthrough is needed to trace the actual incomes of this sector and tax it directly. Again this will be achieved with improved data analysis tools.
