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Recovery from bank accounts
01-05-2012, 06:59 PM
Post: #1
Recovery from bank accounts
The Federal Board of Revenue and banks have agreed to issue instructions/circular to banks to ensure strict compliance of section 140 of the Income Tax Ordinance 2001 for recovery from tax defaulters through their bank accounts.
Under section 140, the FBR can ask banks to recover the unpaid amount of tax from the defaulter's bank accounts.

However, the issue is mainly related to the compliance of the section 140 by the banks for recovery of tax from defaulters through attachment of their bank accounts, etc.

The section 140 deals with the recovery of tax from persons holding money on behalf of a taxpayer.

For the purpose of recovering any tax due by a taxpayer, the Commissioner may, by notice require any person owing or who may owe money to the taxpayer; holding or who may hold money for, or on account of the taxpayer; holding or who may hold money on account of some other person for payment to the taxpayer or having authority of some other person to pay money to the taxpayer, to pay to the Commissioner so much of the money as set out in the notice.

According to sources, the Inland Revenue Service officials flagged the issue of delaying tactics adopted by some of the bank branch managers particularly those at remote locations upon service of a notice under section 140 of the Income Tax Ordinance 2001 by making excuses such as soliciting guidance from their head/regional offices, opinion from legal experts, and even consent from the accountholders, which scenario creates friction and at times compels IRS field formations to resort to initiation of punitive action.

Tax authorities categorically stated that, by virtue of unequivocal formulation of the provision, a notice under Section 140 of the Ordinance has to be executed (implemented) the moment it is served - under all circumstances.

It was decided that the banking sector will issue an instructional but binding circular to all bank branches throughout the country outlining the mechanics of implementation of section 140 of the Ordinance, which will be cleared with Inland Revenue Wing, FBR, before issuance.

The main thrust of the Circular will be that a notice under section 140 of the Ordinance 2011 has to be implemented immediately upon service (receipt) and the bank's action in compliance thereto has been fully indemnified by the law.

Once the bank has complied with the notice to the extent of the amount held by them the notice so issued shall be withdrawn immediately, sources added.
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Recovery from bank accounts - jawad ahmad - 01-05-2012 06:59 PM

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