LAHORE: Corporate sector revenue has fallen 30 percent due to massive shutdowns, particularly in the textile sector, Corporate Tax Office (CTO) Lahore sources said.
They said the number of decommissioned units is increasing, hampering sales growth over the past eight months, which has raised alarm bells at the Federal Board of Revenue (FBR).
The sources feared a downward revision of the overall sales target, which already showed a fall of Rs.240 billion in the first eight months of the current fiscal year.
FBR exceeds February sales target
Accordingly, they added, the board would have no choice but to revise the overall collection target at the end of the last upcoming quarter.
It is also of concern to the tax authorities in the CTO Lahore that the loss of revenue from income tax has been observed. Therefore, the board is considering collecting input taxes from leading companies.
There have also been verbal instructions that taxpayers should pay against current demands to close the revenue gap. They also said the board can also choose to generate revenue through fake claims and exemptions to meet the revenue target.
The tax experts have pointed out that a shortfall in the FBR collection for the first eight months of the current fiscal year, Rs 240 billion to be precise, comes as no surprise considering factors such as import restrictions, high and persistent inflation and the restrictive monetary policy has contracted the economy, squeezing production and reducing incomes, so it’s only natural that tax revenues should shrink as well.
It is found that companies deduct contributions to unauthorized bonus funds while calculating their employees’ income under the heading “Income from companies”. Sources have pointed out that most leading companies make such mistakes and misinterpret income tax law due to misguided advice from their tax advisors.
Sources have also pointed out that all of these efforts fall under the category of tax avoidance, which ultimately pertains to the department’s revenue-generating task.
Unreasonable delays in banks writing off Letters of Credit Documents (LCs) are also causing problems for the corporate sector, as counterfeit documents submitted by their international suppliers for the release of credit documents against fraudulent shipments add further insult to their violations.
In most fraudulent transactions, the sellers/suppliers ship substandard, underweight, and worthless materials and forge their credit documents according to the terms of the contract.
Copyright Business Recorder, 2023