Tax evading restaurants under scrutiny

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Federal Board of Revenue (FBR) has launched a crackdown against restaurants involved in tax evasion under its broadening of tax base campaign. FBR’s Lahore Regional Tax Office (RTO) has deputed special teams at billing counters of various restaurants in the provincial capital to monitor their sales, Profit learnt on Wednesday. FBR sources disclose Lahore RTO has constituted 10 monitoring teams, comprising of field inspectors who would monitor restaurant sales in posh localities, including MM Alam road, Gulberg, Mall Road, Defence Housing Authority, etc. These officials have been directed to prepare a daily sales summary, which would be compared with sales records provided by the restaurant managements with their tax returns.
Sources indicate FBR has compiled a list of hundreds of restaurants operating in the provincial metropolis that are not registered with the tax department. In addition, FBR has also identified a large number of restaurants that are registered with tax department, but paying little or no tax by manipulating sales figures.
Lahore RTO Chief Commissioner Raana Ahmad revealed there was a great discrepancy between sales figures provided by restaurant managements and the data collected by FBR officials. Citing an example, she pointed out one restaurant was claiming that its annual sales were around Rs5 million, which means Rs15,000 daily at 300 days, while GST was applicable on the restaurants with daily sale of Rs16,666. However, when FBR physically monitored the sale of this restaurant, it earned Rs95,000 and Rs124,000 on this Monday and Tuesday, respectively. “If the average sale is calculated at Rs100,000 per day, this restaurant is doing business of Rs30 million per annum,” she estimated and added that FBR had identified so many such cases and would continue its monitoring drive till these people started paying their due tax honestly. He disclosed FBR had gotten access to third party data sources, including NADRA, excise and taxation and immigration department, and had maintained a databank for data cross matching. He said Lahore RTO had served notices to some 22,741 taxpayers who despite of National Tax Numbers (NTN), were not filing tax returns during the last five weeks. The exercise proved successful, as over 1,000 people had contacted back to the tax department, she concluded.

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