FBR proposes rules for recovery of unpaid taxes

KARACHI: Government is mulling new rules to let the tax authorities recover outstanding taxes of delinquent people from their bank accounts and employers, it emerged on Monday.

The Federal Board of Revenue (FBR) proposed the rules to enable the tax authorities to make tax recovery from individuals holding money on behalf of taxpayers. The proposed rules, seeking amendment into Income Tax Rules 2002, would enable tax authorities to recover defaulted amount from banks, employers, tenants and businessmen.

Under draft of the rules, individuals holding money on behalf of taxpayers would remit or send defaulted money through pay orders, demand draft or online banking transfer to the government treasury.

“The recovery of tax shall be made only to the extent of tax due by the taxpayer,” the FRB said in a statutory regulatory order (SRO 111(I)/2020). “In case the money is held jointly with any person other than the defaulter, the shares of the joint holders in such account shall be presumed, until the contrary is proved, to be equal.”

The FBR further said it is not necessary to produce evidence of deposits at the time of recovery from bank accounts of defaulted taxpayers in case recovery is made from any bank. If an individual fails to comply with the proposed recovery rule, then the individual would ‘personally’ be liable to pay the defaulted amount. Tax officials at the Regional Tax Office, Karachi said the new rules would streamline the recovery process especially in the cases where bank accounts are attached due to tax payment default.

An official said recently some banks created hurdles in the way of tax payment recovery. But, a bank branch manager, under the proposed rules, would be responsible to pay the defaulted amount of a taxpayer, if the manager creates problems in recovery from a delinquent taxpayer from his bank account, the official added.

The draft of the rules also envisages some relief to taxpayers with tax officials bound to justify why the recovery notices are issued. Under the draft, notices should be issued before ensuring that no refund is available for adjustment against the tax demand or due to the defaulter.