Q: Define “Federal Board of Revenue”; explain its powers and functions in detail.
Federal Board of Revenue (FBR)
The old name of federal board of revenue (FBR) is central board of revenue (CBR). Income tax ordinance, 2001 uses the word ‘Board’ for FBR and CBR. Board is the highest tax authority in Pakistan. It has the powers to exercise the general administration of income tax ordinance, 2001. It is constituted under the federal board of revenue act, 2007.
The central board of revenue (CBR) was created on April 01, 1924 through the enactment of central board of revenue act, 1924. In 1944, a full-fledged revenue division was established under the Ministry of Finance. After independence, this arrangement continued up to 31st August 1960 when on the recommendation of the Administrative Re-organization committee, CBR was made an attached department of Ministry of Finance. In 1974, further changes were made in the organization and subsequently the post of chairman CBR was created.
CBR to FBR
By the enactment of FBR Act 2007, in July 2007 the Central Board of revenue (CBR) has now become the Federal Board of revenue (FBR).
Organization of FBR
The federal Board of Revenue presently comprises a Chairman and eleven members, appointed by the federal Government as follows;
- Three line members which include Member (Direct taxes), Member (Sale Tax and federal Excise), and Member (Customs)
- Four functional members are Member Fiscal (Research and statistics), Member (Human Resource Management), Member (Audit), and Member (Administration)
- Four support members include Member (Legal), Member (Tax Policy & Reforms), Member (Information Management System), and Member (Facilitation and Tax Education).
Head of Board—Chairman
In the existing setup, the Chairman, FBR, being the executive head of the Board as well as secretary revenue division has the responsibility for;
- Formulation and Administration of fiscal policies
- Levy and collection of Federal taxes
- Judicial function of hearing of appeals.
Powers and Functions of FBR
Followings are the Powers and Functions of Federal Board of Revenue (FBR).
1. Appointing Authority: The Board may appoint as many Chief Commissioner Inland Revenue, Commissioner Inland Revenue, Commissioner Inland Revenue (Appeals), Additional Commissioner Inland Revenue, Deputy Commissioner Inland Revenue, Assistant Commissioner Inland Revenue, Inland Revenue Officers, Inland Revenue Audit Officers, and such other executive and ministerial officers and staff as may be necessary.
2.Appointment of firms of Accountant: The Board is empowered to appoint a firm of Chartered Accountant and Cost and Management Accountant to conduct the audit of any person or firm. The scope of such audit may vary from case to case.
3. Jurisdiction: The Board, by an order may assign the functions and areas to Chief Commissioner Inland Revenue, the Commissioner Inland Revenue, the Commissioner Inland Revenue (Appeals) and to officers of Inland Revenue.
4. Delegation of Powers: On administrative ground, Federal Board of Revenue can delegate its powers to Chief Commissioner Inland Revenue, and Commissioner Inland Revenue. This has been done for the immediate action which is sometimes necessary in specific situation.
5. Controlling authority: FBR is not only appointing authority but it directly control the working of Chief Commissioner Inland Revenue, Commissioner Inland Revenue, Director General Intelligence & Investigation, Director General Training and Research, Assistant Commissioner and Deputy commissioner of Income Tax.
6. Formulation and administration of Fiscal Policies: FBR has the powers to formulate the fiscal policies for the country and then later on implement these policies in accordance with the general rules of Income Tax ordinance, 2001.
7. Levy and Collection of Federal Taxes: FBR is the highest taxation authority in any country, so the matters regarding the tax implementation and collection is major act of FBR.
8. Appointment of surveyor: The Board has powers to appoint any firm or private agency or company to carry out survey of persons, class of persons, or about an area. The agency must have orders in writing. Surveyors will collect all the information as required by the Board.
9. Hearing of appeals: FBR has the powers to hearing of appeals by the tax payer or any other person which is directly affected by any taxation officer. If the case involve any legal point then the matter may referred to Appellate Tribunal.
10. Promote voluntary tax culture: It is the main function of the board to develop policies and programs to guide and facilitate the tax payers, stakeholders and employees. Objective of this turn is to promote voluntary tax culture in the country.
11. Grant approval to leasing companies: FBR has the powers to grant approval to leasing companies and Modaraba companies for their cases of tax concessions.
12. Specify the method of accounting: The methods of accounting related with different type of assets are different. These methods can change the net income of a person or company. For tax purposes there are certain methods which a person or company has to use in accordance to taxation department instructions. These methods are specified by the FBR.
13. Make general rules of the organization: Make the rules for carrying out efficient administration of the ordinance by notification in the official gazette.
14. Determine the procedures for furnishing returns: Determine the procedure for furnishing returns and other documents including on electronic medium or issuing notices or levy default surcharge through electronic medium
15. Appoint income tax authorities: The Board has the powers to appoint as many income tax authorities as possible in the administration of the organization. These authorities include all the officers of Inland Revenue.
16. Authority of approval: The Board may, by a general or special order, authorize the Chief Commissioner or the Commissioner to grant approval in any case where such approval is required from the Board under any provision of this Ordinance
17. Guidance to income tax authorities: In the course of any proceedings under this ordinance, Board may guide and assist any of his subordinate like Chief Commissioner or Commissioner of Inland Revenue (Appeals). Any other taxation officer is guided and instructed by the board where it may be necessary.
18. Con-donation of time limit: Where any time or period has been specified under any of the provisions of the Ordinance or rules made there-under within which any application is to be made or any act or thing is to be done, the Board may, in any case or class of cases, permit such application to be made or such act or thing to be done within such time or period as it may consider appropriate.
19. Power of the Board to call for records: The Board may, of its own motion, call for and examine the record of any organization under this Ordinance or the rules made there-under for the purpose of satisfying itself as to the legality of any decision or order passed therein and may pass such order as it may think fit.
20. To promote voluntary Tax culture: To promote voluntary tax compliance and to make the Board a service oriented organization; and to implement comprehensive policies and programs for the education and facilitation of taxpayers, stakeholders and employees, etc., in order to develop the Board into a modern efficient authority.
21. Adopt modern technology: To adopt modern effective tax administration methods, information technology systems and policies in order to consolidate assessments; improve processes, organize registration of tax payers, widen the tax base, and make departmental remedies more efficient.
22. Human Resource Management: The ‘Board’ may, with the approval of Advisory Board, formulate human resources development and management policies which may include career planning, evaluation for retention in service, and other job and service related matters like posting with the companies or trust formed by the ‘Board’. To improve the productivity through a comprehensive and effective human resource strategy
23. Combat Corruption: To take appropriate measures including internal controls to combat corruption within the organizations under the Board and provide checks to ensure the integrity of employees that is verified periodically through applicable procedure which shall be made one of the criterion for promotion and incentives.
24. Any other function assigned by the Federal Government: The Board shall perform any other functions assigned by the Federal Government for the purpose of implementation of the Income Tax Ordinance 2001.