SRO 78 (I)/2021 The Inland Revenue Reward Rules

Federal Board of Revenue (FBR) issued SRO 78(I)/2021 on 22 January 2021 to introduce the Inland Revenue Reward Rules, 2021. The purpose was to consolidate rewards rules already issued from time to time and make a robust system of incentives to motivate officers of Inland Revenue for enhancing their performance.  The rules also provide incentives to whistle blower and informants not belonging to the office Inland Revenue.

Snapshot

Reference No.	SRO 78 (I)/2021
Description	The Inland Revenue Reward Rules, 2021
Date of Issuance	22 January 2021
Amendment	Consolidation of the Reward Rules, 1980 dated 29 March 1988, The Sales Tax Reward Order dated 30 November 1998, The Unified Reward Rules, 2006 dated 05 December 2006 and SRO 398(I)/2016 dated 05 May, 2016
Objective	To consolidate exiting reward rules and introduce a robust reward system for officials and staff members of Inland Revenue.
Effective date	01 January 2021

Explanation

These rules provide a range of incentives to officers of Inland Revenue and could prove a catalyst in enhancing the collection of taxes and reduction in evasion of taxes. Resultantly, tax to GDP ratio is expected to increase from existing percentage of 9% which is one of the lowest in the world. The rules offer rewards for the following services:

1. Detection and assessment / recovery of tax sought to be evaded
2. Whistleblowing and Information
3. Meritorious services
4. Extraordinary performance

The detail of each is as follows.

1. Detection and assessment / recovery of tax sought to be evaded

The rules have been framed for specific statutes, therefore, term tax sought to be evaded has been defined accordingly.

a) For the Sales Tax Act, the Federal Excise Act and Islamabad Capital Territory (Tax on Services) Ordinance

Tax sought to be evaded means:

• Detection of an un-registered person liable to be registered and/or
• Detection of evasion or non-assessment including short-assessment of tax by a registered person or detection of payment of inadmissible refunds or
• Claim of inadmissible input tax resulting in and leading to an assessment/determination of tax owed to the state

b) The Income Tax Ordinance

   Tax sought to be evaded = Tax calculated / computed on account of re-assessment of income –       Tax originally paid on the basis of income originally assessed/declared

Amount of Rewards: The rewards have been categorized in the following types:

1.     If the detection and assessment have been made by the same officer, lessor of 20% of tax sought to be evaded or 3 years’ salary.

2.     If the detection and assessment have been made by separately by two officer, lessor of 20% of tax sought to be evaded or 2 years’ salary for each of the officer.

3.     If there are more than one officer either for detection or assessment, the proportionate amount of the reward shall be distributed among officers.

Conditions: The reward will be paid only if the tax sought to be evaded has been recovered at least 50% of the tax sought to be evaded.

Rewarding Authority: There are two levels of authorities who can award rewards.

Chairman FBR / Secretary Revenue Division if officers / members of staff are

1. Inland Revenue Operations wing and its associated detachments
2. Any FBR wing tasked with Inland Revenue Functions 

Member Inland Revenue-Operations if officers / members of staff are

1. Large Taxpayers’ Offices, Medium Taxpayers’ Offices, Corporate Tax Offices and Regional Tax Offices or any associated and subordinate detachments. These are collectively called Inland Revenue Field Formations.
2. Inland Revenue Directorate Generals and their field offices.
3. Post Refund Analysis Cell (PRAC) established by Inland Revenue Wing.  

Payment of Reward:

1. If no appeal is filed assessment, immediately after the expiry of time limitation for filing the appeal.
2. If appeal is filed, half at the time of confirmation at 1^st appeal and half at the time of completion of appellate process on the point of fact.

2. Informer / Whistle Blower

Under the rules, any person, who is not an employee of FBR, can be a whistle blower. If he gets himself registered with FBR and

1. provides information in shape of concrete evidence which leads to detection of tax evasion, formulation of assessment/reassessment, and eventual recovery of the evaded taxes; and
2. lodges a claim on the prescribed format on the conclusion of the above mentioned processes.

Amount of Rewards: 20% up to a maximum of Rs. 5 million of the tax sought to be evaded in a single case.

Rewarding Authority: Chairman Federal Board of Revenue is the rewarding authority.

3. Meritorious Services

As per the rules that Meritorious Services means and include exceptional services in the following area:

1. Exceeding budgetary targets through extra-ordinary planning and efforts.
2. Displaying exceptional results in the recovery of arrears
3. Enlarging the base of taxpayers by adding large number of new taxpayers whose contribution to revenues would be substantial.
4. Exceptional performance in defending cases (by the Departmental Representatives) before ATIR.
5. Displaying extra-ordinary devotion to duty and acumen towards making some original contribution.

Amount of Rewards: The amount of rewarded will not be less than 3 or more than 6 salaries in each single case

Rewarding Authority: Chairman Federal Board of Revenue is the rewarding authority.

4. Extraordinary Performance

Extraordinary performance means a duly notified activity-oriented task assigned to and performed by an officer or a staff or a group of officers/staff up to an exhibited degree of excellence and within the timelines prescribed and pre-notified for the purpose.

Amount of Rewards: The amount of rewarded will not be less than 12 or more than 24 salaries in each single case.

Rewarding Authority: Chairman Federal Board of Revenue is the rewarding authority.

Please find more details here.