Mystery of tax returns

Tax matters can be taxing for most people, especially if there are any discrepancies in them. Prime Minister Imran Khan, too, is discovering this the hard way.

A leading proponent of tax system and tax reforms, Imran Khan has been harping on the importance of paying taxes and has been overtly critical of the rich and powerful as well as of the masses for their tendency to evade the taxes, which, he insists, is a crime and a major factor affecting the economy.

However, the recent revelations about his personal tax returns have surely put the PM in the spotlight.

The disparity in Imran Khan’s tax returns – filed during the past few years – have raised a few eyebrows and has been a topic of debate in the media.

The opposition has also called for scrutiny of the PM’s accounts in the light of the tax directory of parliamentarians for 2019 released by the Federal Board of Revenue (FBR) a few days back.

Reportedly, Rs9.8 million tax paid by the premier in 2019 has been more than the cumulative tax he has paid during his entire tax paying history.

Official documents, seen by Bol News, revealed that Imran Khan just paid Rs1.35 million in six years from 2013 till 2018 but in 2019, a year after taking oath as the prime minister, he paid as much as Rs9.8m.

In 2013, Imran Khan paid Rs194,936 as income tax. In 2014, he paid Rs108,547; in 2015, Rs76,244; in 2016, Rs159,609; in 2017, Rs103,763; in 2018, Rs282,499 and in 2019 the PM paid Rs9,854,959.

Bol News has obtained tax details of the prime minister from the Free and Fair Election Network’s (Fafen) website, tax directories and government sources.

According to the Income Tax Ordinance 2001, tax has to be deducted from any company, any person or any association of person (AOP) or any type of ongoing business or venture. However, donations accepted by trusts, non-government organizations (NGOs) and non-profit organizations (NPOs) are exempted from tax deduction.

“PM Khan, who was declared ‘Sadiq and Amin’ – truthful and trustworthy – by the top court, should have declared his sources of income against which he paid a hefty amount in taxes in 2019,” said a renowned tax expert, while seeking anonymity.

He said a property which a person inherits and which is in his possession for more than five years is exempted from capital gains tax, if sold.

Capital gains tax is a tax on the profit when one sells an asset that has increased in value. It is the gain one makes that is taxed, not the amount of money one receives.

“The premier should answer under which law he earned millions of rupees in a year. From where did the PM receive that so much profit [income] is a million dollar question that has remained unanswered so far,” the expert added.

Responding to another query related to other sources of income, he said withholding tax should have to be deducted over the other sources of income – including share income, rental income or contractual payments for expert opinion and this huge amount has to be transferred through banking channels.

Talking to Bol News, State Minister for Information and Broadcasting Farrukh Habib claimed that the prime minister has already declared his source of income in his wealth statement submitted with the FBR against which he had paid Rs9.8 million as tax in 2019.

Senior lawyer and former Attorney General for Pakistan Anwar Mansoor Khan told Bol News that the prime minister while in office cannot do business or any job whatsoever.

“If he has shares or is part of any joint venture, he may be getting his [share]. He might have received his share against which he has paid more than Rs9.8 million as income tax in 2019,” Mansoor said, adding, he cannot say for sure as he has not seen the premier’s tax details.

Under the Income Tax Ordinance, 2001, all Income is broadly divided into five heads of Income including salary, Income from property, Income from business, capital gains and income from other sources.

Similarly, source of income is defined in section 101 of the Income Tax Ordinance, 2001, which caters for incomes under different heads and situations.

These include salary received or receivable from any employment exercised in Pakistan wherever paid; salary paid by, or on behalf of, the federal government, a provincial government, or a local government in Pakistan, wherever the employment is exercised and dividend paid by a resident company.

It also includes profit on debt paid by a resident person; property or rental Income from the lease of immovable property in Pakistan and pension or annuity paid or payable by a resident or permanent establishment of a non-resident.

Complete tax and assets details along with income of PM Imran Khan

2013

Net Assets current year 2013: Rs 29,675,291

Net Assets previous year 2012: Rs 30,171,088

Decrease: Rs 495,797

Cash in hand: Rs 13,618,526

Personal expenditure: Rs 12,825,300

2014

Total Assets: Rs 32,861,302

Net Assets Current Year: Rs 32,721,302

Net Assets Previous Year: Rs 29,675,291

Increase: Rs 3,046,011

Inflows: Rs 9,981,717

Income for the year subject to normal tax: Rs 2,008,524

Income for the year exempted from tax: Rs 4,535,244

Income Attributable to receipts, etc for the year subject to final tax: Rs 3,437,949

Personal Expenses: Rs 6,935,706

Cash: Rs 13,183,828

Donation, etc: Rs 1,750,000

Other Personal / household expenses: Rs 2,931,731

Total Liabilities: Rs 140,000

2015

Total Assets: Rs 43,485,068

Net Assets Current Year: Rs 43,485,068

Net Assets previous Year: Rs 32,721,302

Increase: Rs 10,763,766

Inflows: Rs 35,650,565

Income for the year subject to normal tax: Rs 921,622

Income for the year exempted fromTax: Rs 3,826,500

Income Attributable to receipts, etc declared as per Return for the year subject to Final Tax: Rs 21,087,443

Personal Expenses: Rs 24,886,799

Cash: Rs 11,519,884

2016

Total Assets: Rs 40,997,246

Net Assets Current Year: Rs 40,997,246

Net Assets Previous Year: Rs 43,485,068

Decrease in Assets: Rs 2,487,822

Inflows: Rs 12,983,878

Income for the year subject to normal tax: Rs 954,408

Income for the year exempted from norml tax: Rs 3,889,400

Income Attributable to receipts, etc declared as per year subject to final tax: Rs 8,140,070

Cash: Rs 7,126,587

Personal expenses: Rs 13,921,700

Donation, etc: Rs 8,287,900

Other personal / household expenses: Rs 2,617,023

2017

Total Assets: Rs 62,852,826

Net Assets Current Year: Rs 38,694,493

Net Assets Previous Year: Rs 40,997,246

Decrease in Assets: Rs 2,302,753

Inflows: Rs 4,776,611

Total Income: Rs 4,168,991

Income for the year subject to normal tax: Rs 1,808,991

Cash: Rs 2,456,414

Total Liabilities: Rs 24,158,333

Personal Expenses: 7,079,364

2018

Total assets: Rs 108,236,154

Net Assets Current Year: Rs 57,949,488

Net Assets Previous Year: Rs 38,694,493

Increase in Assets: Rs 19,254,995

Inflows: Rs 23,882,990

Cash: Rs 24,024,247

Income for the year subject to normal tax: Rs 2,068,000

Income exempted from tax: Rs 20,829,500

Personal Expenses: Rs 4,627,995

Total Liabilities: Rs 50,286,666

2019

Total assets: Rs 151, 236,660

Net Assets current year: Rs 80,691,661

Net Assets previous year: Rs 57,949,488

Increase in Assets: Rs 22,742,173

Inflows: Rs 45,657,760

Cash in hand: Rs 19,951,484

Total Income: Rs 38,900,774

Taxable income: Rs 38,900,774

Personal expenditure: Rs 22, 915,587

Total Liabilities: Rs 70,544,999