ISLAMABAD: The Federal Board of Revenue (FBR) has decided to initiate close coordination with the provincial governments for collection of Agriculture Income Tax (AIT) as part of broadening of narrow tax base of the country.

The newly appointed FBR Chairman Dr Ashfaq Ahmed has issued a letter to all provincial governments for a proactive collaboration. It will be a big challenge to plug in tax evasion of agriculture income. An official announcement said that close cooperation between the FBR and provincial tax authorities will ensure that no taxable income goes untaxed and due taxes are paid in respective collecting jurisdiction.

Dr Ahmed has offered to coordinate a technical level meeting to address the issues relating to taxable agricultural income and curb tax evasion in national interest. He proposed technical collaboration between FBR and provincial tax authorities on AIT which is taxed by provinces and is exempt from the federal Income Tax. He highlighted that tax evaders claim Agricultural Income as exempt in FBR returns and did not pay tax to either the FBR or provincial governments. The Income Tax Ordinance prescribes that Agricultural Income will be exempt only if Provincial Income Tax is paid on it.

To strengthen the enforcement of tax laws, FBR has extended cooperation to provincial governments by offering to issue system generated notices to taxpayers who declare Agricultural Income in federal Income Tax Returns, to duly discharge their tax liabilities with the provinces.

Published in Dawn, August 31st, 2021