Pakistan Tax Bar Association declares VTCS as discriminatory

KARACHI: Pakistan Tax Bar Association (PTBA) has termed the Voluntary Tax Compliance Scheme (VTCS) discriminatory in nature as the scheme is being launched only for traders who are either not in the tax net or did not properly declare their volume of business.

Other segments of business community like manufacturers and service providers have not been included in the scheme which may attract unnecessary litigation resulting into ultimate relief from superior courts of law in favour of the petitioners, as it is clear discrimination within the business community.

Therefore, the government should include all segments of business community irrespective of the nature of business so that maximum number of businessmen may avail the VTCS. It is not fair that a trader who has been a non-filer and avails VTCS is exempted from audit and a regular taxpayer, who has been complying all the requirements of tax laws, is subject to audit. The amnesty may be for everyone and without any discriminatory treatment.

The federal government has itself introduced concept of filer and non-filer in the scheme of Income Tax laws and penalised non-filers by imposing 0.6% advance tax on the banking transactions of non-filers against 0.3% advance tax on the banking transactions of filers with effect from July 2015. It looks that a non-filer, who does not file his return and forgoes his 0.6% advance tax, is discharged from payment of any further tax and is relieved from any further tax compliance. It implies that final tax liability of a non-filer at the rate of 0.6% advance tax is being discharged if such non-filer remains non-filer till the time he is not being caught by the tax authorities.

Obviously, it would not be possible for FBR to probe each and every bank account of non-filers and determine correct tax liability in each case due to huge number of non-filers and non-availability of information about nature of transactions. It is also a fact that every taxpayer shall have recourse to Appellate as well as Superior Constitutional Forums, which mean a non-ending litigation with those Non-Filers who are traceable to FBR.

In order to avoid all these complications, it is appropriate that the scope of VTCS may be extended up to banking transactions of all undeclared bank accounts of the filers as well as non-filers. It is more practical that FBR indiscriminately offers all accountholders to declare their undeclared accounts against payment of 0.1% to 0.6% tax on the banking transactions for the last 5years i.e., from July 2009 to June 2014. It should be threatened that if any person does not declare his transactions voluntarily, the FBR shall take information from the banks and collect such tax forcefully. Through this legislation, undue litigation may be avoided and a reasonable amount of revenue may also be collected without any undue hassle. It is also proposed that protection should be granted that Section 122(5) and 122(5A) of the Income Tax Ordinance, 2001 will not be invoked against declarations under this scheme, KTBA maintained.

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