Taxmen will be able to conduct enquiry and investigation for prosecution purpose on tax-related offences from the current fiscal year (FY), 2018-19, officials said.
The government, through a new provision in the Finance Act 2018, has empowered the tax authority to conduct enquiry and investigation prior to filing criminal cases against individuals and firms for tax-related offences.
According to the provision, the deputy commissioner of taxes (DCTs) may make further enquiry and investigation, in addition to the enquiry already completed, for prosecution of an offence under the income tax law and the Money Laundering Prevention Act (MLPA) 2012.
The offences include concealment of income, furnishing false audit report and statement, and unauthorised employment of foreigners.
Besides, non-compliance of certain obligations including tax deduction at source, submission of tax returns, and furnishing information as per the requirement of tax offices under the income tax law are among the offences.
Other predicated offences related to tax under MLPA are also included in the provision.
The Income Tax Ordinance 1984 incorporates provisions of imprisonment up to five years with or without fine for the tax-related offences.
Earlier, the taxmen were not authorised to conduct enquiry and investigation for prosecution purpose.
The National Board of Revenue (NBR) officials said tax officials were only empowered to summon taxpayers, both individual and corporate, and ask them to provide required information.
They usually collected information from various sources, including banks and internal audit, to conduct investigation. On the basis of the collected information, the taxmen launched prosecution-related steps.
With the new provision, the DCTs now have the authority to conduct full-fledged enquiry and investigation.
They will be able to collect necessary evidences of offences and conduct physical inspections in different places with the prior approval of commissioner of taxes.
However, the tax officials said they usually discourage prosecution, and rather focus on realising evaded tax through administrative process.
A very few criminal cases were filed against offenders in the history of NBR. Most of the cases were filed during the emergency period of 1/11 regime.
The tax officials also said they will be able to conduct thorough investigation for prosecution with the help of the new provision.
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