ISLAMABAD, Nov 30: The income tax department withheld an amount of Rs18.694 billion as refund of taxpayers in 16,275 cases during the first four months (July-October) of the fiscal year 2006-07, which helped the department in surpassing the tax collection target set for the same period.

Well-placed sources told Dawn on Wednesday that this amount of refunds might be even greater than the reported one as the department did not have any effective automated system for compilation or issuance of the refunds to taxpayers.

Official statistics compiled by the Central Board of Revenue showed that the income tax department, besides blocking of refunds, had also collected an advance tax of Rs22.208 billion from big taxpayers during the July-October period in order to reflect higher growth in revenue during the period under review.

The CBR was using this tactics for the last many years as a weapon to hide its inefficiency rather to create demand for tax collection or conduct any audit after the announcement of the universal self-assessment scheme.

The statistics showed that the Large Taxpayers Unit (LTU), Karachi, was on top of the list in withholding the refunds, which stood at around Rs7.906 billion during the period under review in 111 cases. This was followed by the northern region, which held up around Rs5,486 billion refunds of taxpayers during July-Oct of the fiscal year 2006-07.

The LTU, Lahore, withheld an amount of Rs3,962 billion of taxpayers during the first four months of the current fiscal year; an amount of Rs368 million by the corporate region; Rs318 million by the southern region; Rs168 million by the eastern region; and Rs486 million by the central region.

The statistics showed that with the exception of the northern region, the two LTUs established as a result of the reform project of the tax administration were on top of the list in blocking refunds of the taxpayers. This negates the policy of the government that reforms of tax administration would help in facilitating the taxpayers in getting their refunds at the earliest.

The CBR had already zero rated all inputs and import of the leading export-oriented industries from the levy of general sales tax for its failure to develop a mechanism to collect and release due refunds to exporters within the stipulated time.

This indicates that the tax wizards have so far no plan to address this crucial issue rather seeking timely cosmetic measures, which seemed in no way to help in establishing an effective system for refunds collection.