ISLAMABAD: The plan to broaden the tax base is facing delays as the National Database and Registration Authority (Nadra) is unclear about the status of data of potential taxpayers, Dawn has learnt from knowledgeable sources.

The Federal Board of Revenue (FBR) and Nadra had signed an agreement to come up with data of potential taxpayers for uploading on the FBR web portal for the voluntarily filing of tax returns. As part of the agreement, the FBR has already shared its data with Nadra for verification.

Earlier, the government has claimed to have collected data of over 43 million people to identify potential taxpayers for bringing them under the tax net. The campaign on the voluntary filing of tax returns on the basis of this data was to be launched in December 2021 and then in January, but missed in both cases by the FBR.

The deadline for sharing the data has already lapsed, a source in the FBR told Dawn. “We have sent several letters as well as reminders to Nadra,” the source said.

Nadra will scrutinise and filter the data sent by the FBR to identify the potential taxpayers while using a scoring system. Similarly, it will also process the data to compare it with certain indicators through Artificial Intelligence to identify non-filers and then share the data with the FBR within a period of 40 days for uploading on its specific web portal.

Last week, a high-level meeting was also convened in the FBR to review the status of the data. The meeting was also attended by senior Nadra officials, the source said, adding Nadra wants FBR to take ownership of the status of data after uploading it on its website.

Another source claimed that Nadra has no confidence in the data mainly because of the mechanism used for evolving it. “Nadra is not satisfied with the data,” the source said, adding Nadra wanted FBR to take responsibility if any issue arises after uploading on the website.

According to the source, the FBR has conveyed to Nadra that the tax machinery has no mechanism to check or verify the data. The only system is to issue a notice to a person and then follow the procedures laid down in the Income Tax Ordinance.

In the first phase, Nadra has provided data of 100 people, which according to the source was returned back on the plea of deficiencies. As a result, the sharing of data would now be further delayed, the source said.

On the other hand, the FBR has already finalised a comprehensive plan, which includes a mass media campaign to encourage people to come under the tax net on a voluntary basis. This also includes a dedicated web portal on the FBR website for uploading data.

The FBR has also signed an agreement with tax bar associations for allowing a lawyer to charge a fee of Rs5,000 for the filing of the tax return which involves a minimum tax of Rs10,000. “We have already hired lawyers for this purpose”, the source said.

The proposed list of people would be uploaded on the FBR website for information of the general public, the source said, adding that the data would also be uploaded on a dedicated interactive app so that people could check their details. On the interactive app, people would also be able to verify or reject the information about them, the source said.

A dedicated time period will be given to people to file their returns on a voluntary basis. Legal action will be initiated after the lapse of time for voluntarily filing the tax returns.

Broadening the tax base using Nadra data was earlier tried in the governments of the PPP and then the PML-N and notices were issued in bulk but the FBR failed to bring people under the tax net.

Published in Dawn, March 24th, 2022