Taxpayers to be under \\\'third-party\\\' watch

Government's revenue authority plans to introduce a new 'third-party information system' to crosscheck taxpayers' furnished information against their financial transactions.
The mechanism being devised by the National Board of Revenue (NBR) is meant for checking tax evasion, officials said.  
Under the system, selected agencies would put up information on purchase of land, cars or other large financial transactions by people to help the tax authorities match those with the tax returns.
The agencies would submit an annual information return as per section 75 of the Income Tax Ordinance 1984. There would be a gazette notification with working method and names of companies or individuals who would have the responsibility to submit annual information returns.
Recently, the NBR formed a five-member committee to recommend and propose amendments to the income-tax rules for the introduction of third-party information system. The committee is to submit its report shortly.
A senior NBR official said the taxmen would be able to get all the information of financial transactions by taxpayers online under this sort of tax intelligence.
There would be online connectivity through which taxpayer's identification number (TIN) and inconsistencies in furnished information would be easily detected, he added.
 "For example, if any taxpayer bought land or car but hid the information in the tax-file, they would be caught up by the taxmen on the system," he said about the trick of what seems to be planned as a digital decoy.
The revenue board would introduce the system under the existing Tax Administration Capacity and Taxpayer Service (TACTS) project.
The committee would recommend list of names of the agencies to be assigned to the task of collating and submitting annual tax-information return.
It would also prepare a sample format of furnishing information in the returns. The system would be integrated with the e-TIN and other automation activities of the NBR.
Tax officials said currently, few agencies provide information on financial transaction by taxpayers--upon direction of the NBR or on their own--in an unsystematic way.
Taxmen faced difficulties in checking that information with the tax files as it is maintained in manual system.
Currently, the tax files are being maintained under manual system that is scattered in different tax zones. It is difficult for taxmen to find out a tax file on the basis of e-TIN.
From 2016, all tax files would be automated with the introduction of online tax return-submission system. All of the information of taxpayers would be maintained in digitized format.
The officials said taxmen would be able to crosscheck the information as the third-party information system would detect the evasions interlinking with the information of tax files.
This system would be accessible for only taxmen, officials said, as a safeguard against any cooking of the books.
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