ISLAMABAD: The Federal Board of Revenue (FBR), while defending the deduction of withholding tax from bank accounts of companies, observed that any amendment in the Clause-138 of the Income Tax Ordinance 2001 would be tantamount to converting the tax authority into toothless.
Member Inland Revenue-Policy, Rehmatullah Khan Wazir and Member Customs Nasir Masroor Ahmad were of the view that the FBR had full rights and powers to recover WHT directly from the bank account of companies.
They were responding to observations raised by staunch critics of FBR, Senator Kamil Ali Agha and Senator Talha Mehmood in the meeting of the Senate Standing Committee on Finance and Revenue.
Both the Senators along with the Chairman Committee Salim Mandviwala have been raising the issue of recovery of WHT directly from the bank accounts and charging of tax from China Harbour Engineering Company (CHEC) Limited since long.
They were terming the act of FBR as a dacoity on account that the said company had not been pre informed about the said act; however, Rehmatullah Khan Wazir clarified the situation by informing the committee that WHT and income tax worth of Rs 200 billion was receivable from the said company and a number of notices had been served to company prior to the said action.
However, the said company instead of responding to FBR’s notices preferred going into litigation against the FBR, therefore, finding no other option, FBR took the appropriate action in this regard” he maintained.
At this the committee decided to propose an amendment in the section 138 of the Income Tax Act 2001, however, on the intervention of Senator Ayesha Raza Farooq, the committee postponed flouting of proposal regarding amendment to next meeting.
It is pertinent to note here that the section 138 provides the provisions that for the purpose of recovering any tax due by taxpayer, the Commissioner may serve upon the taxpayer a notice in the prescribed form requiring him to pay the said amount within such time as may be specified in the notice.
If the amount referred to in the notice issued under sub-section (1) is not paid within the time specified therein or within the further time, if any, allowed by the Commissioner, the Commissioner may proceed to recover from the taxpayer said amount by one or more modes including attachment and sale of any movable or immovable property of the taxpayer, appointment of a receiver for the management of the movable or immovable property of the taxpayer and arrest of the taxpayer and his detention in prison for a period not exceeding six months.
Moreover, this section states that for the purposes of recovery of tax under sub-section (2Commissioner shall have the same powers as a Civil Court has under the Code of Civil Procedure, 1908 (Act V of 1908), for the purposes of the recovery of any amount due under a decree.
On another issue Rehmatullah Wazir informed the committee that FBR had prepared a proposal of reducing tax from IT industry from eight to two percent for the upcoming budget. This proposal had been prepared in the wake of transfer and shifting of IT industrial units to Dubai, Bangladesh, Singapore and other countries from Pakistan due to higher taxation rates.
To another issue, Member Customs Nasir Masroor agreed to grant tax exemption of Rs 350 million to importer of CNG buses imported in 2011. Due course of discussion on this issue, the importer apprised the committee that FBR promised to grant tax exemption on the import of CNG buses in 2011 but now the FBR had started issuing notices for the deposit of taxes.
He further presented an example before the committee that FBR had granted exemption to another importer of CNG buses in 2014; however, Nasir Masroor declined being privy to any such act. But, on the recommendation of committee, Masroor agreed to grant tax exemption to the first importer too.
