KARACHI, July 4: The Federal Board of Revenue (FBR) has announced Tax Arrears Settlement Incentive Scheme (Tasis), 2008 to allow those taxpayers against whom income tax arrears, including additional tax and penalty for non-payment, are outstanding.

The scheme is valid for a period of three months from July 1 to Sept 30, 2008 and could also be availed by withholding agents, who did not deposit tax into the Treasury or failed to withhold the tax, including additional tax and penalty thereon as accrued or was leviable.

The scheme was announced by the finance minister in the budget 2008-09 for which the FBR has come out with working details through circular No. 04 of 2008 issued on July 1, 2008.

According to the details of the scheme a taxpayer, who disputed the tax demand before the appellate authorities and now wants to settle the arrears could also benefit from the scheme.

The FBR has specified the categories of taxpayers, who could avail the Tasis. They include an individual, a company or an association of persons incorporated, formed, organised or established in Pakistan or elsewhere, as defined in section 80 of the Income Tax Ordinance, 2001.

The scheme allows a taxpayer on payment of the principal amount of arrears, in lump sum or in agreed instalments, additional tax and penalty on arrears shall stand waived off provided additional tax at reduced rate of 5 per cent per annum is paid in case payment is to be made in instalments within the stipulated period.

According to the scheme a taxpayer desirous to settle the arrears will have to submit a statement of outstanding arrears along with penalty for non-payment and amount of statutory additional tax, accrued and actual, or the arrears in litigation before the appellate authorities, to the commissioner in the prescribed manner and offer settlement of arrears under the provisions of the scheme.

However, the tax experts

have questioning the condition as laid down in the scheme that the commissioner will, within seven days of the receipt of the statement, issue a certified copy of the arrear statement confirming from his records the total amount of arrears and accept the offer for the proposed settlement, if the amount of arrears is the same as stated by a taxpayer.

In case the arrears as per ledger of the commissioner are different from a taxpayer’s statement the correct amount of arrears, for proposed settlement, will be communicated to a taxpayer within seven days of the receipt of the statement.

A taxpayer will have to deposit the principal amount of arrears within seven days of the communication from the commissioner.

In case the arrear is settled to be paid in instalments, each instalment will be paid by due date, and not later than September 30, 2008, along with additional tax at the rate of 5 per cent per annum of the unpaid amount of arrears.

It is being generally believed that this condition provides a tool to the commissioner to twist the arm of a willing taxpayer; therefore, it would be counter productive and may become the main cause failure of the scheme.

The arrears in dispute before the appellate authorities would be settled provided a taxpayer opts to withdraw the appeal and the disputed tax is paid in lump sum or in three monthly instalments with additional tax and penalty, if any.

However, the FBR has pointed out that in case of failure to pay total tax liability within the prescribed (agreed) period shall result in lapse of waiver of additional tax and penalty and entire arrears will be recovered under the normal provisions of law.