Federal Budget 2023-24: Govt plans to collect consumers' tax data from utility firms

• Sources say utility companies will be directed to gather sales and income tax data.
• Industrial and commercial connections will be mapped with sales tax or income tax numbers.
• PRMC also recommends govt to introduce one-page return form for retailers and traders.

ISLAMABAD: In order to collect sales and income tax data from utility connections on the basis of Computerised National Identity Cards (CNICs), the coalition government is mulling to bring legal changes in the upcoming budget for the fiscal year 2023-24, The News reported Sunday.

According to sources, all industrial and commercial connections will be mapped with sales tax or income tax numbers.

"The utility companies will be directed to gather sales tax and income tax data about utility connection holders based on the CNIC against which electricity or gas connection has been issued,” the sources confirmed.

At present, more than four million industrial and commercial connections are being used, whereas income tax and sales tax return filers in the commercial and industrial sectors are very less.

The number of sales tax filers is hardly 100,000, out of which more than 50% are non-filers. Moreover, the total number of income tax filers is 3.5 million, including major filers belonging to salaried class.

The high-powered Reforms and Resource Mobilisation Commission (PRMC) has also recommended the government to introduce a one-page return form for retailers and traders in the upcoming budget.

To increase the tax net and encourage retailers and traders to file income tax returns, a simple, one-page income tax return format should be introduced with the minimum required fields.

The existing return filing form is extremely cumbersome, and filing the same is an uphill task. To encourage return filing by potential or new taxpayers, the requirement for the filing of a wealth statement should be waived for the initial two years of filing an income tax return.

Moreover, for existing taxpayers, the format of the wealth statement should be simplified.

The most technical statement in the entire income tax return form is the wealth statement and its reconciliation.

To resolve the issue of pending cases, it has been suggested that the government should consider the following:

a) A case settlement mechanism should be introduced whereby taxpayers are allowed to settle their pending cases by payment of 50% of the tax liability for all cases pending before the Commissioner of Appeals.

b) For cases pending before the Appellate Tribunal of Inland Revenues (ATIR), taxpayers should beallowed to settle outstanding cases by payment of 50% of the disputed amount in cases where the decision was in favour of the tax department by CIRA and 25% in the case of the taxpayer.

c) For all other outstanding cases filed before June 30, 2023:

CIRA be directed to finalise all outstanding cases by December 31, 2023.

ATIR is asked to form a committee to group cases on similar legal issues and decide via a single order on each legal issue.

d) For all cases to be filed after June 30, 2023, a maximum timeline should be prescribed within which the cases should be decided.