ISLAMABAD: The Federal Board of Revenue (FBR) is of the view that Voluntary Tax Compliance Scheme (VTCS) can’t be declared as a failed attempt to broaden the tax base and document the economy.
“So far 9,020 returns have been filed under the VTCS and a huge amount of tax Rs 850 million has been deposited resulting into documentation of working capital of Rs 85 billion,” sources told Customs Today.
The source said that before introduction of VTCS, it was noted that around 61,000 traders were declaring taxable income exceeding Rs 400,000. In this background the response of 9,020 traders may not be termed failure of VTCS,” the source added.
Moreover, the source added that unlike amnesty schemes, which had been introduced by the previous governments, VTCS was introduced at the request of traders in the wake of withholding tax and the federal government had nothing to lose since withholding tax under section 236-P would still be applicable to non-filers, the rate of which, at present is 0.4%.
The source added that the scheme was introduced at the request of representatives of trade bodies, business chambers and FPCCI in the wake of 0.6% withholding tax on bank transactions on non-filers under section 236-P through the Finance Act, 2015, which was reduced to 0.3% up to February 29, 2016 and then increased to 0.4% from March 01 however, now it has been extended up to May 31 by the Economic Coordination Committee of the Cabinet (ECC).
“Since the objective of withholding tax was documentation and expanding the tax base, the federal government agreed to accept the demand of the traders after long drawn discussion that instead of paying withholding tax on banking transactions of non-filers, a scheme be introduced whereby non-filers would file their returns, and become filers and consequently withholding tax will not be applicable to them” the source observed.
The source said that as per the estimates provided by the traders it was expected that a large number of traders would avail the scheme in coming days.
