Deadline extended for tax amnesty scheme till March 31

Source: Published in Business & Economy on Wednesday, March 16, 2016

ISLAMABAD: Finance Minister Ishaq Dar on Tuesday extended the last date of the Voluntary Tax Compliance Scheme (VTCS) to March 31 in hope of bringing more traders in the tax net.

The decision was taken in a meeting with a traders’ delegation and members of the business community with the finance minister.

Special Assistant to Prime Minister on Revenue, Haroon Akhtar, MNA Mian Abdul Manan and Chairman Federal Board of Revenue, Nisar Mohammad Khan were also present at the meeting.

“We received 1,000 returns under the amnesty scheme on March 15,” an official of the income tax department told Dawn on condition of anonymity. He said the huge number of returns in a single day was an encouraging sign.

Until March 15, which was the last date of the scheme, the total number of returns received was 3,647 with a tax amount of Rs356 million since the scheme’s inception one-and-a-half months ago, the officer added.

The scheme is aimed at bringing in one million traders in the tax net. The government has also extended the last date of filing of income tax returns and statements by individuals and associations of persons until March 21.

Finance Minister in his capacity as ECC chairman also accorded anticipatory approval for extension in the period of concessionary rate of 0.4 per cent withholding tax on banking transactions by non-filers up to March 31, 2016.

The National Assembly had approved the VTCS and it came into effect on Feb 1. It was extended until March 15 on Feb 29, 2016 after a meek response from traders.

In budget 2015-16, the government imposed 0.6pc withholding tax on banking transactions. The levy was later reduced to 0.4pc.

According to an official source in the FBR, Regional Tax Office (RTO)-I Lahore received 820 returns, which is the highest number of returns under the scheme. RTO-II Lahore received 389, the second highest returns until March 15, 2016.

The three RTOs based in Karachi received total returns of 539. Of these RTO-I received 182 returns, RTO-II 261 and RTO-III 96.

Islamabad RTO received only 51 returns, while RTO Rawalpindi received 57 returns until March 15. In Khyber Pakhtunkhwa, RTO Peshawar received only 37 returns. The only RTO in Balochistan, which is located at Quetta, received only 90 returns until March 15, 2016.

The number of returns in Sukkur, Hyderabad, Sialkot, Multan, Faisalabad, Gujranwala, Bahawalpur, Sargodha and Abbotabad also increased.

The FBR has offered traders to whiten up to Rs50m worth business capital by paying only 1pc tax. The withholding tax rate was lowered to 0.3pc from 0.6pc on banking transactions until the scheme is effective.

According to market reports, Naeem Mir Group that is said to be close to PML-N enjoys limited support in traders while Khalid Pervez Group, which is believed to be more popular boycotted the scheme.

Earlier in November 2013, amenesty scheme of the PML-N government for industrialist met a similar fate. The businesses were offered to whiten the black money of up to Rs10m through investment in certain sectors. However, neither the tax base expanded nor did investments pick up in the prescribed sectors.

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  • Muhammad Ishaq Dar Federal Minister for Finance, Revenue, Economic Affairs and Statistics