E U Khwaja

I am surprised that there is a controversy on the removal of restrictions brought about on purchase of certain assets by non-filers and this is understood as the main cause of tax evasion. This concept is completely devoid of any reason as a matter of fact, this establishes complete incompetence of the Federal Board of Revenue (FBR) although they are fully equipped with all means of detecting tax evasion, receiving all the information but unable to utilize such information and check the real persons who are chargeable to tax but have effectively evaded the tax. I would categorize the persons as follows–

Summary

The provision of section 227C placed restrictions on the purchase of certain assets were brought about vide the Finance Act, 2018 by the previous government which has an ill-conceived concept that this will help them to catch tax evaders. I would simply draw the attention to the provisions of Article 23 of the Constitution of the Islamic Republic of Pakistan, 1973 which reads as under–

23. Provision as to property.- Every citizen shall have the right to acquire, hold and dispose of property in any part of Pakistan, subject to the Constitution and any reasonable restrictions imposed by law in the public interest.

In view of the above constitutional provisions, the restrictions imposed appears ultra-virus to the Constitution.

It is pertinent to note that where you are buying immovable property or a motor vehicle, an advance tax is invariably collected although not chargeable which may be adjusted against the liability, if any. Similarly on all cash withdrawals beyond specified limit tax is collected which is also adjustable advance tax.

The purpose of charging advance tax as a token is to provide the FBR a clue where they should work and give notice to such person which they are not doing. The law takes care and empowers the FBR to go after them however, because of their incompetence or unwillingness, the real tax evaders are not being caught. The people buying or selling these assets for which the FBR has the information, why it can’t go after them. In general, provisions bringing about restrictions on acquisition are absurd for the economy of every country. There are potential industrial schemes for the production of motor vehicles in Pakistan which are thinking to roll back their plans that Pakistan has ousted majority of its citizens from buying these assets.

For God sake, let the industry flourish, let the economic activity continue. Go after such persons where you find any evasion of tax but do not stop people from carrying out legitimate transactions which otherwise help economy to grow.