Former Finance Minister Muftah Ismail criticized the PTI government’s proposal to empower the Federal Board of Revenue (FBR) to arrest people, warning that the law would lead to harassment of citizens. ۔
“The FBR’s tax inspector has been given the right to arrest people. This will not increase the revenue, but the FBR will upset the people, “Ismail told a press conference on the budget. He also said that the FBR has to return Rs 700 billion to the people.
The PML-N leader claimed that the reputation of his party president Shahbaz Sharif had been turned into a “U-turn” by the PTI government in imposing taxes on baby milk and food items. He also claimed that the Imran Khan government had illegally allocated Rs 292 billion for privatization.
Ismail said the government has set aside Rs 610 billion from the petroleum levy. He said that according to the calculations, this would mean a levy charge of Rs 30.50.
The PML-N leader said that this would result in an increase in petroleum prices and would ultimately lead to inflation.
The former finance minister claimed that the World Bank had stopped its payments to Pakistan.
He said that these people (PTI ministers) have not met the target of any IMF in the last two years. He has suspended the IMF program.
He demanded the government to reverse the decision to pay tax on medical allowances to government employees.
The Finance Bill recommends giving the FBR greater powers to make arrests
The Finance Bill 2021-22 proposes to give the FBR some “basic and clear powers” to arrest taxpayers for concealing income and to take legal action against taxpayers. News Reported earlier this week.
Under the proposed changes, all Inland Revenue (IR) officers, starting with the Assistant Commissioner, can arrest a taxpayer on a tax offense without filing a complaint with a special judge.
Thus, for the first time, the concept of pre-arrest and detention is being introduced in the Income Tax Act. The only condition for arresting a taxpayer is that the officer influencing the arrest “believes” that the taxpayer has committed a crime under which action can be taken under the law. There will be no need to even file a complaint before a special judge.
However, the Senate Standing Committee on Finance has rejected the FBR officers’ proposed powers to arrest and prosecute taxpayers on suspicion of tax evasion. Opposition members called the FBR officers’ proposed powers “draconian” and said they would not approve them in parliament.
The question then arises as to why the FBR proposed more clear powers when the Income Tax Ordinance (ITO) 2001 already has provisions for litigation.
Tax experts say that the Income Tax Ordinance 2001 contains a complete chapter covering income tax orders ranging from concealment of income against income tax to non-submission of returns.
Punishments for these crimes range from one to seven years and a fine of up to Rs 5 million. These penalties include collection of taxes, fines and default surcharges, among other responsibilities imposed on defaulters under the ordinance.
Procedures required to prosecute and punish a defaulter include filing a case before a special judge appointed by the federal government. Only one person, who has been or has been a Sessions Judge, may be appointed Special Judge for the purpose of probing income tax offenses.
The Commissioner of Income Tax may lodge a complaint before a special judge who will take action under the Code of Conduct 1898. The High Court has an appeal against the order of the special judge. Only after the trial is completed by a special judge can the defaulter be arrested as a result of the conviction.
The Finance Bill 2021 now proposes to make some fundamental changes to the said procedure and give FBR officers greater powers to arrest and detain taxpayers.
Under the proposed law, the officer initiating the arrest shall notify the Special Judge of the arrest and, within 24 hours of the arrest, present the arrested Judge before the Special Judge or Judicial Magistrate and the Special Judge for an indefinite period. May order detention or accept bail application.
The Special Judge may, at the request of the arresting officer, detain the arrested person for the purpose of interrogation for a period of 14 days. The provision of remand in the custody of the Inquiry Officer is itself contradictory because if the arresting officer has any evidence that legal action has been taken against the person, his arrest will be affected.
Another provision of the proposed law proves that arrest powers will be exercised without any evidence if the officer is of the opinion that there is insufficient evidence or reasonable grounds for suspicion against such person after arrest and interrogation. If so, they will release him after that. On the enforcement of the bond, and direct such person to appear before the special judge and request the special judge to remove such person.
The proposed law completely ignores the usual procedure of tax assessment under the Income Tax Act and seeks to introduce a parallel system of inquiry and commitment of liability but fails to clarify whether this dual system Will be able to run freely or follow each other.
It should be kept in mind that a similar system of arrest is available under sales tax and federal excise laws as the nature and scheme of these laws is very different from income tax and such powers are justified for the administration of these taxes. Can be offered.
But even in the case of sales tax, the courts have not granted these coercive powers without prior contempt and judgment of tax liability under the usual procedure. However, the FBR has ignored these court rulings in its attempts to obtain similar powers under income tax laws.
Completely unfamiliar with the scheme of income tax law, the definition of proposed powers for arrest and detention has been in force for the last 100 years as the proclamation of the Income Tax Act of 1922 is sufficient to show the strict nature of the proposed law.
There is a good chance that taxpayers will be harassed and that they will be exposed to corrupt practices. It is incomprehensible why the Finance Minister, who himself has confessed and expressed concern over the harassment of taxpayers by the FBR, wants to deprive the same officers of the oppressive and discretionary powers that harass them. We will take the work to an extraordinary level.
The finance minister had intended to use the budget and finance bill to stimulate economic recovery and growth, but giving the FBR such crushing powers would completely erode the confidence of traders and ordinary taxpayers.
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