KARACHI: The Federal Revenue Council (FBR) has ruled out an extension of payment terms under a tax amnesty scheme announced last year, citing the need for legal changes to each of those concessions, sources said on Saturday.
The source said earlier this month a notification for asset concealment was sent to defaulters under a tax amnesty scheme. However, a large number of statement givers asked the tax authorities to give them time to make payments.
An official at the Karachi Regional Tax Office (RTO) said the complainants asked for further time on paying taxes under an amnesty. Due to the coronavirus lockdown and cessation of business activities, they said they could not make payments by the due date, the official said.
“Since the issuance of the amnesty scheme is a parliamentary act, the extension of time needs to be regulated through the parliament,” said the RTO official.
In May last year, the government announced a tax amnesty, covering undisclosed foreign and local assets (including benami) and expenditures.
The declaration under the amnesty scheme is permitted to pay the amount of tax in installments at a default surcharge. The payment scheme with an additional default fee is 10 percent if the amount due is paid no later than September 30, 2019; 20 percent if the amount in arrears is paid before 31 December 2019; 30 percent if the amount due was paid before March 31 and 40 percent if the tax amount was paid by June 30.
RTO Karachi estimates Rs610 million can be recovered from assets declared based on the applicable tax rates for the amnesty. The amnesty scheme allows the declaration of all assets except domestic immovable property at four percent. A 1.5 percent tax rate is offered for undisclosed domestic immovable property. Meanwhile, undisclosed foreign liquid assets that are not repatriated are offered to get a clear chit of 6 percent. The amnesty scheme offers 4 percent for unexplained expenses and 2 percent for undisclosed sales.
The amnesty scheme provides comprehensive immunity from other laws except for those whose money comes from the proceeds of crime or terror financing. In addition, public office holders are not allowed to take advantage of the scheme. The official said because the declarator failed to make payments on June 30 and the FBR did not provide an extension of the payment period, the tax department would reject the declaration under amnesty.
In the event of rejection of the declaration, assets / income that are announced will attract normal tax rates in addition to a fine of the same amount of tax due will also be returned, the official added.
FBR sent 560 notifications to absent individuals. The FBR decided to initiate punitive action against the amnesty declaration, which failed to make tax payments on hidden assets declared under the amnesty scheme, sources said.
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