ISLAMABAD: Amid a record fiscal deficit and low revenue collection, the Federal Revenue Board (FBR) delivered 482,354 notices to unregistered or non-compliant industrial and commercial consumers across the country in order to persuade them to submit income by electronic files. Tax return for fiscal year 2019.
Alarmingly poor compliance with tax laws is at the heart of the country's growing fiscal deficit.
Nine energy distribution companies and six regional FBR offices in conjunction with regional tax offices (RTO) issued notices to unregistered units across the country. The notices warn about the interruption of supplies in case they do not enter the tax list.
Section 181AA of the Income Tax Ordinance requires all holders of industrial and commercial connections to register with the FBR. The section further clarifies that the government will not process any commercial or industrial connection request for electricity or gas unless the applicant registers with the FBR.
Shortly after the budget, the FBR asked the Energy Division to provide data on the total number of commercial and industrial consumers that were absent from the tax lists.
The data, shared by the Energy Division, revealed that there are about 267,724 unregistered industrial consumers in the country with about 2.52 million unregistered commercial energy consumers. These figures, however, do not include unregistered Karachi consumers.
In Karachi, K Electric delivered the largest number of notices to 253,945 to industrial and commercial consumers until last week.
However, the FBR has not compiled compliance data resulting from the issuance of these notices. In addition, the FBR has also not compiled data on the total number of industrial and commercial consumers in Karachi so far.
When contacted, FBR President Shabbar Zaidi said Dawn that your team is compiling data to evaluate the compliance of these notices with the respective distribution companies. "The respective RTOs are working to identify how many of them are registered following the notices," he said.
The total number of industrial and commercial consumers not registered in Pakistan, excluding Karachi, was 2,787 million. Islamabad emerged as the second leading city where the FBR served 58,000 notices to industrial and commercial consumers to place them under the tax network.
The notices issued to consumers not registered in Lahore were 52,528, Rawalpindi 41,784 and Multan 18,500.
Commercial consumers' compliance with income tax remains very poor, since there are only 37,146 commercial consumers, 1.47 percent, who have obtained National Tax Numbers (NTN). In the case of commercial consumers, only those consumers can pay the income tax or register with the income tax, which pays Rs1m or more per year on electricity bills.
The registration of industrial units under the income tax is also pathetic, since only 25,871 industrial consumers currently own NTN.
Posted in Dawn, September 25, 2019