The Federal Board of Revenue (FBR) has randomly issued electronic notices to thousands of taxpayers to verify movable or immovable property, including undeclared immovable property.
According to tax payer advisor, the FBR system of Pakistan Revenue Automation Limited (PRL) has issued notices under Section 176 of the 2001 Income Tax Ordinance. The last date for verification is 31st December 2020.
The tax payers who regularly pay income taxes are notified as well. However, the data collected does not match by FBR collected from various external and third party sources.
The FBR gave taxpayerss an opportunity to clarify the inconsistencies in their profits. The FBR has the power to issue notices under Section 122 (Assessment Annexure) of Section 122B of the Income Tax Ordinance. In this case, the FBR will have to pass a tax directive or adjustment to a refund, leaving taxpayers with no choice.
Current notices require taxpayers only to report discrepancies to the tax department and to prevent litigation. Notifications cannot be called ‘bias’ because they are not manual notifications but are computer notifications generated by the system.
Under section 176, the tax department may issue notices to anyone seeking information or evidence. The Commissioner may, by written notice, require any person to provide any information relating to any tax, whether he or she is responsible or not. The notices instruct the ratepayer to state the reason for not disclosing the property and review the property report and the property reconciliation report by 31 December 2020.
These notices are generated electronically and are based primarily on the capture of tax and transaction data. At the time of registration or transfer of the property, tax exemptions were obtained from the system and notices were issued to the buyers of the properties.
The declared that the notices were not to hide or evade paying taxes but were to submit relevant information to the FBR.
In most cases, notices were issued if the property was declared last year, but data was issued the following year at the time of submission of the return. In some cases, the property mentioned in the notice is not purchased by the relevant taxpayer who received the notice. There are cases where notices have been issued without paying tax on DC value, but due to poor data management, the actual value of the property is disclosed in the income tax.
The system has selected cases where the information does not match, or the specified value of the property does not match the information available with FBR.
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