KARACHI (June 11 2003) : The Income Tax Department will be divided into eight functional departments, each having separate assignment.
The departments will be of 'taxpayer service', 'information', 'audit', 'collection', 'legal', 'refund', 'human resource' and 'information technology'.
This was stated by Zafar Aziz Osmani, Member, Central Board of Revenue, while speaking on 'Tax Reforms-Challenges and the way forward present and future impact on Pakistan's economy and common man' organised by '21st Century Business Club' on Monday.
He said that there would be 12 income tax offices all over the country which would carry out processing of tax cases.
In addition, there will be 96 taxpayer service offices, which would receive tax returns and forward them for processing.
Talking about new projects in tax reform process, he said that the Customs Administration Reform projects (Care), to be introduced from July, would be based on risk based analysis–ensuring clearance of goods within 24 hours.
About 80 percent of imports will be cleared on self-declaration while only 20 percent cases involving high risk will be put to scrutiny and audit.
The CBR Member pointed out that with the introduction of Universal Self-Assessment Scheme from July 1, 80 percent of tax returns would be accepted as 'Assessment orders'.
He said that under the old system, about 1.2 million taxpayers had to approach the income tax officers for assessment.
Eighty percent of these taxpayers would now not see the face of any income tax officer.
He said that two major projects of tax reform have already been undertaken successfully.
These include setting up of large taxpayer unit (LTU) in Karachi providing efficient service to 292 top taxpayers.
It is now being expanded to include more taxpayers. Similarly, a model taxpayer unit has been set up at Lahore providing service to about 10,000 taxpayers.
Such model taxpayer units would be opened in other major cities of the country.
Osmani said that the biggest challenge for the tax reformers is to create a tax culture and to promote voluntary compliance of tax rules among the taxpayers.
The objective could be achieved through simplified and taxpayer-friendly procedures.
There is need for a shift from the present transaction based procedures to the risk based system.
He said that the tax reform project lays special stress on human resource development to create a pool of honest and dedicated employees who should come up to the expectations of the taxpayers besides doing their actual job of resource mobilisation.
There was a general consensus in 36 workshops held to improve human resource capabilities that most of the officers are not up to the expectations of the taxpayers.
The CBR Member said that the tax officers who were earlier advised to collect revenue by any means are now being asked to provide maximum facilitation to the taxpayers, along with collecting due tax.
He said that steps are being taken for re-structuring of CBR, which is aimed at preparing professional and motivated tax officers.
Presently, there are 30,000 employees in CBR, of whom only 7 percent do the assessment job.
About 28,500 people are employed in support services in addition to an army of 10,000 sepoys.
A human resource development strategy has been adopted for selection of right persons on market-based salaries.
The new incumbents are sent for MBA degree course from the IBA.
Only employees with technical experience would be retained in the CBR and the remaining would be sent to other departments.
During the question-answer session it was pointed out that the new budget did not contain any simplified tax procedures and incentives for the small and medium size industries.
A questioner suggested that the appeal effects should be passed on to the affected persons within 30 days.
It was also suggested that income tax commissioners and collector Customs should hold open katcheries to hear the grievances of the public.
A questioner wanted to know why a number of changes have been made in the new Income Tax Ordinance when it is said to be a collection of simplified tax rules.
The Member CBR said that there was always need for interpretation in every new set of rules.
In response to another question, Osmani said that under the universal self-assessment scheme the remaining 20 percent cases would be chosen for audit through parametric selection criteria.
Moin Fudda, President of Karachi Stock Exchange, praised the tax administration reforms carried out by the CBR for modernisation of tax system and expressed the hope that the day was not far off when the taxpayers would file their returns through e-mail, receive the tax credit electronically transferred to the taxpayer account.
Earlier, presenting the address of welcome, he said that the '21st Century Business Club' had initiated the dialogue and interaction with prominent professionals and would continue the process for creating awareness and culture of corporate growth and long-term development for a better, transparent and equal opportunity environment for Pakistan's businesses and for betterment of a common man.
The function was attended among others by Consuls-General of China, Japan and Switzerland, Chairman of Pakistan Steel Col Mohammad Afzal, and Akhtar Jamil, Director General of Large Taxpayer Unit (LTU).