National Database and Registration Authority (NADRA) has been empowered to compute indicative income and tax liability on the basis of a person’s various expenses, receipts, assets, properties, and liabilities, etc. The government has authorized NADRA to use artificial intelligence, mathematical or statistical modeling, or any modern methods to increase the tax base of the country.
NADRA to use artificial intelligence under the Tax Laws; Third Amendment Ordinance, 2021
NADRA has been given powers, to use artificial intelligence and other modern methods, under the Tax Laws (Third Amendment) Ordinance 2021 promulgated on Friday to authorize the government body to broaden the country’s tax base. The government is intending to bring a large number of people into the tax net, besides generating substantial revenues.
Following the recent set of rules defined by FBR, under section 175B of Income Tax Ordinance 2021;
(1)The National Database and Registration Authority shall, on its own motion or upon application by the Board, share its records and any information available or held by it, with the Board, for broadening of the tax base or carrying out the purposes of this Ordinance.
(2) The National Database and Registration Authority may—
(i) submit proposals and information to the Board [Federal Board of Revenue] with a view to broadening the tax base;
(ii) identify in relation to any person, whether a taxpayer or not –
(a) income, receipts, assets, properties, liabilities, expenditures, or transactions that have escaped assessment or are under-assessed or have been assessed at a low rate, or have been subjected to excessive relief or refund or have not been declared or misclassified under a particular head of income or otherwise;
(b) the value of anything mentioned in sub-clause (a) of clause (ii), if such value is at variance with the value notified by the Board or the district authorities, as the case may be, or if no such value has been notified the true or market value; and
(c) enter into a memorandum of understanding with the Board for secure exchange and utilization of a person’s information.
(3) The Board [FBR]may use and utilize any information communicated to it by the National Database and Registration Authority and forward such information to an income tax authority having jurisdiction in relation to the subject matter regarding the information, who may utilize the information for the purposes of this Ordinance.
(4) The National Database and Registration Authority may compute indicative income and tax liability of anyone mentioned under sub-section (1) or (2) by use of artificial intelligence, mathematical or statistical modeling, or any other modern device or calculation method.
(5) The indicative income and tax liability computed by the National Database and Registration Authority under sub-section (4) shall be notified by the Board to the person in respect of whom such indicative income and tax liability have been determined, who shall have the option to pay the determined amount on such terms, conditions, installments, discounts, reprieves pertaining to penalty and default surcharge, and time limits that may be prescribed by the Board.
(6) In case the person against whom liability has been determined under sub-section (4), does not pay such liability within the time prescribed under sub-section (5), the Board shall take action under this Ordinance, upon the basis of tax liability computed under sub-section (4).
(7) If the person against whom the liability has been determined under subsection (4) pays such liability in terms of sub-section (5), such payment shall be construed to be an amended assessment order under section 120 or sub-section (1) of section 122 or sub-section (4) of section 122 as the case may be.
(8) For the purposes of sub-sections (4) and (5), the Board may prescribe the extent of installments, reprieves pertaining to penalty and default surcharge, and time limits.
Suspension of Phone, gas, and power
The Federal Board of Revenue (FBR) has made it clear that date extension for return filing is not under consideration. This means the persons having taxable income shall file their returns after the due date with fines and penalties besides facing harsh actions that are introduced in the aforementioned law. The FBR is additionally empowered to discontinue the non-filer’s mobile phone connections, electricity connections, and gas connections.