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Adjudication collectorates to be abolished

ISLAMABAD (June 08 2005): Central Board of Revenue (CBR) chairman Abdullah Yousuf said that the CBR has decided to abolish all collectorates of adjudication pertaining to customs, sales tax and central excise from July 1, 2005.

The adjudication powers, in cases of contravention reports and appeals, would be transferred to regional collectorates.

He told Business Recorder on Tuesday, that collectorates of adjudication were established with the authority to independently decide adjudication cases without intervention of regional collectorates.

However, the experiment of separate adjudication collectorates was not successful, as they were still making decisions in favour of the department instead of taxpayers. So there was no use of setting up separate adjudication body.

The CBR chairman added necessary amendments have been introduced in the finance bill 2005-06 for abolishing these collectorates from July 1, 2005.

He said section 114 of the Income Tax Ordinance 2001 has been amended to withdraw the condition of compulsory filing of return by subscribers of telephone, including mobile phone, persons travelling abroad and members of clubs.

A person, who owns immovable property with a land area of 250 square yards or more, has to file tax return as was previously applicable. A proposal to make it mandatory for credit card holders to file a return has not been incorporated in the budget.

All people, other than salaried employees, whose income is liable to tax, should have to file an income tax return, irrespective of the category of taxpayer.

Another provision has been introduced in the budget, whereby, the income tax return filed electronically on the web or any magnetic media or any other computer readable media shall also deemed to be a return, he maintained.

He said the CBR would set up separate department in collectorates with the sole objective of broadening of tax base. These specialised offices will look for new taxpayers only on the basis of database available with the CBR.

He said information collected through various sources about taxpayers has helped the CBR to form a comprehensive database and the taxpayer could not deny the documented information.

He said the budget has particularly focused on tariff rationalisation on cloth/yarn, etc, to check smuggling of these items. Smugglers will not find it feasible to smuggle goods and prefer to adopt legalised channels for import.

The smuggling could be effectively checked only through fiscal measures as compared to administrative measures like check-posts, etc

He said the CBR would be able to meet revenue collection target of Rs 690 billion set for 2005-06 through broadening of tax base.

The current year's target of Rs 580 billion seemed to be an ambitious one, but the CBR was able to achieve it. Similarly, coming year's target is also achievable, he said.

When asked how the CBR will collect additional Rs 100 billion during the current year, he explained that Rs 10 billion would be generated through revenue generation measures. However, Rs 90 billion will materialise through increased economic activity in the country. The target of Rs 690 billion has been set keeping in view inflation, exchange rate and GDP growth rate.

When asked whether tax managers expect an equal response from the business community as a result of facilitative measures announced in the budget, Yousuf said facilitative measures would automatically encourage the business community to file tax return.

One taxpayer tells another also to file return on the basis of his own experience with the tax machinery.

He clarified that no 6 percent withholding tax has been proposed on sale of locally manufactured cars in the budget, similarly no 7.5 percent central excise duty has been proposed on services provided by banks and financial institutions.

He also clarified that for calculating duties and taxes, the rate of depreciation on old automotive vehicles imported under transfer of residence, gift or personal baggage scheme, is 2 percent per month subject to a maximum of 50 percent.

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