Unregistered industrial, commercial units served tax notices

ISLAMABAD: Amid record fiscal deficit and low revenue collection, the Federal Board of Revenue (FBR) served as many as 482,354 notices to non-registered or non-compliant industrial and commercial consumers across the country in order to persuade them to e-file income tax return for the tax year 2019.

The alarmingly poor compliance with tax laws is at the heart of country’s widening fiscal deficit.

Nine power distribution companies and six FBR regional offices jointly with regional tax offices (RTOs) issued notices to unregistered units across the country. The notices warned of discontinuation of supplies in case they failed to come on the tax roll.

Section 181AA of the Income Tax Ordinance mandates every industrial and commercial connection holder to register with the FBR. The section further clarifies that the government will not process any application for commercial or industrial connection for electricity or gas unless the applicant registers with the FBR.

Soon after budget, the FBR requested the Power Division to provide data on total number of commercial and industrial consumers who were absent from tax rolls.

The data, shared by the Power Division, revealed there are around 267,724 unregistered industrial consumers in the country with around 2.52 million unregistered commercial power consumers. These figures, however, do not include Karachi’s unregistered consumers.

In Karachi, the K Electric served highest number of notices at 253,945 to industrial and commercial consumers until last week.

However, the FBR has not compiled data on the compliance resulting from the issuance of these notices. Moreover, the FBR has also not compiled data on total number of industrial and commercial consumers in Karachi so far.

When contacted, FBR Chairman Shabbar Zaidi told Dawn that his team is compiling data to assess the compliance of these notices with respective distribution companies. “The respective RTOs are working to identify how many of them get registered in the wake of notices”, he said.

The total number of unregistered industrial and commercial consumers across Pakistan excluding Karachi stood at 2.787m. Islamabad emerged as the second leading city where the FBR served 58,000 notices to industrial and commercial consumers to bring them under the tax net.

Notices issued to unregistered consumers in Lahore were 52,528, Rawalpindi 41,784 and Multan 18,500.

Compliance by commercial consumers on the income tax roll remains very poor, as there are only 37,146 commercial consumers ­— 1.47 per cent, who have obtained National Tax Numbers (NTNs). In case of commercial consumers, only those consumers can pay income tax or get registered with the income tax, who pay Rs1m or above per annum in electricity bills.

The registration of industrial units under income tax is also pathetic as well with only 25,871 industrial consumers currently holding NTNs.

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