Business, Taxation

New withholding plan enforced: payments made by key sectors and NPOs to be monitored

The Federal Board of Revenue (FBR) has decided to conduct special monitoring of payments made by Non-Profit Organizations (NPOs) and withholding monitoring of key sectors, ie, telecom, banks, oil/gas/power, tobacco, textile, cement, sugar, cotton ginners and flour mills under the new ‘Comprehensive Withholding Monitoring & Audit Strategy’ for 2017-18.

Sources told Business Recorder here on Wednesday that the new administration of FBR Member Inland Revenue Operations Khawaja Tanveer Ahmad has enforced the said withholding plan on national level to streamline withholding tax collection in 2017-18. The enforcement ‘Comprehensive Withholding Monitoring & Audit Strategy’ 2017-18 is one of the key initiatives of FBR Member Inland Revenue Operations to increase revenue collection in 2017-18.

The FBR has communicated the comprehensive withholding monitoring & Audit Strategy for enhancement of revenue during 2017-18 to all the Chief Commissioners Inland Revenue of Large Taxpayer Units (LTUs), Regional Tax Offices (RTOs) and Corporate Regional Tax Offices (CRTOs). According to the FBR, a comprehensive Withholding Monitoring & Audit Strategy (2017-18) has been devised for strengthening the ongoing revenue enhancement efforts of the field formations, for the current fiscal year.

The said strategy comprises of the salient features including Quarterly Withholding Audit Plan (QWAP) by each field formation one week before the beginning of new quarter. The plan cover withholding audit of at least five cases per month out of Board’s identified list of Withholding Agents, to be included in the Quarterly withholding Audit Plan.

It cover periodic monitoring/audit of Excise & Taxation Department, property registration/recording authorities/housing societies, national Saving Centre(s)/Post Office (s) and Discos/CPPA, to ensure timely collection of withholding taxes as per prescribed tax rates (for filers/non-filers).

The strategy included quality desk audit(s) of at least 10 withholding (WH) Statements per month, of potential revenue yielding entities by each unit incharge, to be submitted to the CIR concerned.

It included proactive monitoring of procurements (ie, key tender notices published in the newspapers regularly intimated by the Board). Moreover, the strategy included special monitoring of payments by Non-Profit Organizations(s) (NPOS).

The plan cover pro-active withholding monitoring of all ongoing Projects/Programmes including Assignment Account (Development/Non-Development), Revolving Fund Accounts, Provincial Ledger Accounts (PLAs), Special Drawing Accounts (SDAs) and maintenance of database of their budget allocations, releases, expenditure & tax deductions/deposits thereof with risk based, periodic audit of at least 2-3 entities (as assigned) per quarter. The plan talks about the proactive monitoring of salaries disbursements especially concerning large private and corporate sector entities including statutory authorities/autonomous bodies.

The new strategy would ensure effective withholding monitoring of key sectors such as telecom, banks, oil/gas/power, tobacco, textile, cement, sugar, cotton ginners, flour mills and others. The strategy would also cover minimum 10 percent recovery out of Net Collectable withholding Demand on monthly basis and recovery of remaining four-fifth of sales tax from government vendors.

The plan also address the shortfall identified in revenue spinning sections as per monthly ‘DRS’ data circulated by exploring revenue potential in other withholding sections and awareness workshops for education of key withholding agents/Govt DDOs. The plan also covers quarterly conference of Commissioners (WHZs/others) & periodic visits by Board team. Considering the said features as included in the subject strategy, all RTOs/LTUs are requested to prepare Activity Plan ensure smooth, timely implementation of the strategy for maximum exploration of the revenue potential, the FBR added.