NBR dispels confusion about legalising undisclosed income

FE Team | Published: August 11, 2007 00:00:00 | Updated: February 01, 2018 00:00:00

FE Report
The National Board of Revenue (NBR) has clarified its July 31 announcement regarding disclosure of earlier undeclared income and assets to dispel any confusion among the people.
The directives of NBR for declaration of the undisclosed income and investment upon payment of the tax at the usual rate plus five per cent penal charges are: a) All taxpayers irrespective of professions are entitled to avail themselves of the opportunity of disclosing their undeclared income or investment;
b) Disclosure can be made about the previous five years' income as well as current tax assessment year's income;
c) Taxpayers who will declare their undisclosed income will determine tax on the basis of both disclosed and undisclosed income in their respective tax returns. Then they will adjust the tax paid earlier to determine unpaid tax and pay an additional penal tax of 5.0 per cent. The taxpayers will submit year-wise statement in a white paper. Tax paid at source will be allowed to adjust with the final tax. The taxpayers will pay the tax considering the convenient tax rate between the second schedule of tax ordinance under capital gains and the applicable tax rate of concerned tax year. The earlier tax rebate under the new law will not be applicable if the benefits taken out of the concessionary tax rate facility was not undisclosed until June 30, 2007 under section 19B, 19BB, 19BBB of income tax ordinance 1994. But tax disclosure can be made in 2007-08 if such opportunity had been availed of, in 2006-07;
d) Regular taxpayers having undisclosed money before 2002-03 tax assessment year will able to include such income in the same assessment year. Citing example, the NBR said the first five tax assessment years ended on June 30, 2007. So, undisclosed income for one or more tax years before 2002-03 can be disclosed in 2002-03 tax year. For the above mentioned undisclosed income or investment, taxpayers will have to show their overall assets in their wealth statements/ balance-sheets. The new taxpayers will be able to pay their due tax for any tax year through year-wise estimates. So, the five-year bar is not applicable for the new taxpayers and they can pay tax for any tax assessment year they want;
e) No explanation will be sought for the source of income, which was previously undisclosed but fall under the stated conditions of present facility;
f) The income tax department will not consider such incomes as a base while assessing the total income for 2007-08 tax assessment year and the following years;
g) Taxpayers against whom allegations of tax evasion have been uncovered or legal action is underway for dodging taxes cannot take the opportunity to declare taxes under this law. Others, however, will be able to avail this opportunity. Under the Income Tax Ordinance, no punitive action will be taken against those who will declare income and pay taxes, despite defaulting on the payment of previous income taxes. However, only fines at the rate of 5.0 per cent will be slapped against them;
h) If a taxpayer submits his tax return along with documents related to declaration of income for tax assessment regularly to avail the mentioned facilities, tax officials can initiate legal procedures on the basis of information furnished in those documents. Same return will be considered the given return under section 93 of the Income Tax Ordinance and it will be applicable for return without any question as per the 82B(1) of the same ordinance;
i) In no way, the directives of this SRO can be breached afterwards; that means the above-mentioned facilities will remain void.