ISLAMABAD: Federal Board of Revenue (FBR) Chairman Tariq Bajwa has step up efforts to resolve the dispute between revenue authority and banking companies over the reconciliation of figures of refunds and compensations.
“This issue has been lingering over last decade and now the FBR Chairman constituted a three-member high-level monitoring and evaluation team to look into the matter,” a well placed source at FBR told Customs Today.
Special Assistant to FBR Chairman, Dr Muhammad Iqbal will head the team, while Chief of Policy I & II Amjad Zubair Tiwana and Dr Tariq Masood are members of the team. The team will visit Large Taxpayers’ Unit (LTU) Karachi and Lahore to reconcile the figures of refunds and compensation paid to banking companies since 1997-98.
This issue is related to four major banking companies, HBL, NBP, Faysal Bank and ABL. A huge amount approximately tune to Rs30 to 40 billion had been paid to banking companies as refunds and compensation in result of their appeals with the courts.
After appeal, a huge amount of refunds was not only created but paid as compensation as well as adjusted against the paid amount by the banking companies as income tax. However, when figures were scrutinised minutely, it was established that compensations were paid on erroneous and fake, therefore, payment of compensation was wrong.
Later, the higher applets authority’s orders were contradictory to previous orders, but till then amount of refundable had been transferred into payable amount, however, no concrete effort had been made for reconciliation of figures of banking companies and FBR officials.
This issue has been lingering on since last 15 years and no Chairman ever paid heed to take up this issue, but now Bajwa has mobilised a high-level team to establish the accurate figure of total amount of refund. Now Bajwa has directed the team to go for some settlement.
Some banks paid an amount of income tax during the fiscal year 1997-98, however, FBR officials on the basis of tax returns filed by the banking companies, issued notices to those companies for not depositing accurate amount of income tax. FBR also imposed penalty on those companies and forced them to pay the fined amount.
However, these companies filed petitions in the courts against action taken by FBR and courts upheld stance of companies and withheld FBR from carrying forward proceedings against the companies.
On the time of filling of tax returns in the next fiscal years, banking companies, asked FBR to adjust the amount paid as fine in the income tax and even baking companies received compensation against keeping their money with FBR.
But on scrutiny of tax returns and other relevant data, FBR’s stance and claim was established accurate. Since then, this issue has been unresolved and no chairman FBR ever tried to resolve it but now Tariq Bajwa directed the team to resolve the dispute either way.