The Senate Standing Committee on Finance has recommended to the Federal Board of Revenue (FBR) to immediately withdraw its new instructions with regard to attachment of the bank accounts for recovery of tax and intimate the chairman secretariat in this regard.
The finance committee also strongly opposed mandatory condition of the corporate sector to make payments through digital payment mode.
The meeting presided over by Senator Talha Mahmood after hearing the view point of the Member Operation FBR, Qaiser Iqbal, and input of the members of the committee unanimously, decided that the new instruction is against the promotion of tax culture and must be immediately withdrawn.
The committee also decided, if the FBR will not withdraw the instruction of attachment of bank accounts, the committee will get approved its recommendation from the Senate.
The FBR Member Inland Revenue Operations informed the committee that the instructions of the former FBR chairman Shabbar Zaidi regarding prior approval of the FBR chairman before attachment of bank accounts was against the law.
Former FBR chairman kept powers of Commissioners with himself.
There was instances that the tax defaulters have empty their accounts in 5-10 minutes after getting prior approval of the FBR chairman and intimation to the taxpayers.
Qaiser Iqbal stated that, “I would like to explain that the administrative instructions can be withdrawn at any stage. My comments about old instructions were against the law and were just a slip of tongue.”
On this, Senator Saleem Mandviwalla said that the former FBR chairman should be called in the committee meeting to explain his position.
Senator Farooq H Naek said that laws are being made in the country that would discourage foreign and domestic investment and that no one could do business. The committee was unanimous that May 2019 notification/instruction of the FBR was designed to promote tax culture but the latest one is damaging for the businesses.
Earlier, when the committee started proceeding on the agenda of withdrawal of May 10, 2019 directives, Member Operation FBR Qaiser Iqbal, while briefing to the committee stated that power rests with the commissioner to attach a bank account and there is a laid down mechanism and no account is closed without asking.
However, he said that the former chairman has taken the power of the commissioner.
The FBR member said that through the new instructions, the FBR has streamlined the system of attachment of bank accounts.
The FBR had directed Chief Commissioners that the coercive measures including attachment of bank accounts should be avoided until case has been decided at the level of first forum of appeals i.e. Commissioner Inland Revenue (Appeals).
Moreover, a committee comprising Senior Commissioner IR headed by Chief Commissioner IR may be constituted at formation level to deliberate on the cases before according approval of the coercive measures.
Therefore, after implementation of the new system, the FBR had withdrawn the earlier instructions of May 2019.
Senator Mohsin Aziz said that if the tax culture is to be promoted, the status quo has to be maintained.
Upon this, the Standing Committee unanimously, decided that the previous setup should be maintained as culture of issuing notices to the people has been affecting business in the country.
The committee also sought details of the notices issued during the last three years.
The committee was also briefed regarding the reporting mechanism of the Commissioner of Appeals.
The standing committee was informed that this is an administrative matter and the Commissioner of Appeals reports to the Member Legal.
The FBR never interferes with the Commissioner’s appeal.
Chairman Committee Senator Mahmood said that soon the Standing Committee on Finance would convene a public hearing, in which, the issues would be reviewed by summoning investors, traders and representatives of the business community.
On the agenda item of digital payments for the corporate sector, the Standing Committee was informed that it has been decided in September through an amended ordinance that more than 2.5 lakh in any head digital payments will be made.
The system of digital payment would be implemented from November 1, 2021, the meeting was informed that instead of cheques, digital payments will be made.
Senator Mohsin Aziz said that the corporate sector may not be familiar with digital payment, which would create many problems for them.
Senator Farooq H Naek has asked the FBR officials as to what was the urgency to implement the digital payment through ordinance as usually such measures are taken in the money bill.
The chairman of the committee said that although this was an ordinance and it would lapse after 120 days, yet, the committee does not support it.
A detailed briefing was obtained from the State Bank of Pakistan and the Ministry of Finance regarding the 2015-2018 rebates of the flour mills.
The chairman Floor Association informed the Standing Committee that there is a liability of Rs54 crores for 30 mills being cleared by the State Bank of Pakistan (SBP).
Upon this, the SBP officials stated that the mills whose papers were not complete were sent back to the concerned banks and a committee was also formed to review the time-barred cases.
The Standing Committee decided that all the cases of the flour mills should be cleared within three weeks and the committee should be informed.