Ishaq Dar, the minister of finance, stopped the Federal Board of Revenue (FBR) on Saturday from paying its officers’ allowances with public money without authorization, but he held off on firing those in charge of implementing the scheme.
According to a statement from the Ministry of Finance, “keeping in view the current economic situation in Pakistan, the federal minister for finance has taken notice of the matter and asked the FBR to put the implementation of these guidelines on hold.”
The FBR announced new guidelines to redirect taxes and fees for the distribution of allowances among its officers, including the chairman, and other personal perks to officers belonging to the Inland Revenue Service, Shout Me Please has previously reported (IRS).
On Saturday, new information came to light that showed the director general of digital invoicing had opposed diverting cash intended for Points of Sale (POS) system Technology upgrades, but other officials had persuaded him, according to sources.
Initially, the FBR wanted to divert 100% of the POS payments, but the DG invoicing insisted that 10% be kept for technology advancement.
According to the finance ministry, Section 76 of the Sales Tax Act of 1990 was added by the Finance Act of 2019, giving the FBR the authority to charge tier-1 retailers Re1 per invoice in levies, fees, and services with the minister’s consent.
Following that, the FBR assessed tier-1 retailers a POS service fee of Re1 for each invoice with the then-federal finance minister’s assent.
However, at this point, the finance minister did nothing to punish the FBR for disobeying the rules.
No rules could be announced without the consent of the federal cabinet, which meant the federal government, according to a representative of the Prime Minister’s Office.
The IRS Common Pool Fund Rules 2023 were discreetly announced by the tax administration without first seeking approval from the federal cabinet. However, the FBR said that their wage was not even close to matching that of other government organizations like the FIA, IB, NAB, PAS, PSP, or other civil service units, and so it was permissible to divert taxpayer funds for personal use.
Surprisingly, there are no regulations that permit the FBR to abuse the funds collected from rich and impoverished people for technical advancement. Even from someone whose monthly income may only be Rs 10,000, the FBR collects Re1 per invoice.
According to the guidelines, the IRS Common Pool Fund had been established and would receive up to 90% of the revenue from the collection of a “Point of Sale (POS) service fee.”
Every citizen pays Re1 on each invoice created at the time of shopping, and the entire amount collected totals hundreds of millions of rupees. These funds are now going to be used for the personal gain of tax officials, including the chairman.
The FBR initially intended to use the receipts to pay the “headquarters support allowance” to all grade 17 to 22 officers.
Officers in grades 17–18 and 19–20 will each earn a monthly allowance of Rs20,000 and Rs30,000, respectively. The monthly allowance for officers in grades 21–22 would increase by Rs40,000.
According to the new rules that haven’t been suspended, the FBR members—all of whom are in grades 21 and 22—and its chairman have come up with the idea to use the POS fee for the officers’ mess.