LAHORE: The Federal Board of Revenue (FBR) on Friday deducted the Rs66m tax from the Lahore Development Authority (LDA) directly through its bank accounts allegedly without the authority’s knowledge.

The LDA came to know of the tax deduction after the bank debited Rs66m and transferred it to the FBR bank account.

“They (FBR) recovered tax of Rs66m it had calculated/assessed on the basis of LDA’s annual turnover for the fiscal year 2016-17,” a senior official source told Dawn.

The FBR had served a notice to the authority last month with the direction to pay Rs73m tax. However, the LDA rejected the FBR’s stance, terming the tax amount unjustified. It further decided to take up the matter with the Punjab government by sending a summary to the chief minister.

“They had initially estimated tax of Rs73m. But, later they, perhaps, reassessed it, reducing it to Rs66m. Today, we came to know that the FBR has deducted the amount from our bank account,” the official said and added, “Though the law allows the FBR to take such steps independently, but this must be amended”.

The official said the LDA had been taxed on the basis of its annual turnover as the FBR calls it turnover tax that is assessed, irrespective of profit and loss. It (FBR) considered the LDA and other development authorities as corporate bodies or companies as defined in the Income Ordinance 2001. “But our stance is that we, under the LDA Act 1975, are a government agency as well as a corporate body,” the official said.

The development authorities such as LDA were exempted from tax under the ordinance until 2009. Later, the government amended the ordinance to include such entities as taxable firms. However, none of the authorities, including the LDA, were served notices regarding payment of the tax assessed on the basis of the annual turnover.

“The LDA administration is surprised why the FBR took such a step since the LDA and other development authorities in Punjab are neither profit-oriented organisations nor working as corporate bodies. The LDA is working for service delivery in the form of various jobs, including launch of infrastructure development projects,” the official explained. He said the LDA would soon challenge the FBR’s act before the tribunal under the law.

Published in Dawn, November 17th, 2018