KPMG tax principal Suresh R.I. Perera has urged the government to amend parts of the proposed Inland Revenue (Amendment) Bill at the committee stage, citing the Supreme Court’s determination on key provisions affecting taxpayer liability and enforcement.
Perera said the Supreme Court had ruled that proposed Section 185A, which criminalises administrative failures, was constitutional, but expressed hope the government would change the section in favour of taxpayers during committee-stage amendments.
He also flagged concerns over the proposed Section 163(4A–4H), which introduces a new “certificate procedure” allowing action through the Magistrate’s Court.
“In relation to the new Section 163(4A–4H) that introduces the ‘certificate procedure’, where the Magistrate is prevented from even questioning the accuracy of the certificate issued by CGIR, the Supreme Court has provided an option to the government. Either pass it with a two-thirds majority or amend it to pass with a simple majority,” Perera said.
Under the proposed mechanism, the Commissioner General of Inland Revenue (CGIR) could issue a certificate against a taxpayer in default, allowing unpaid taxes to be treated as a fine and potentially leading to imprisonment.
Perera said he expects the government to follow the court’s observations despite having the parliamentary numbers required to pass the provision unchanged.
“As we all know, the government has a two-thirds majority in Parliament. But since the Supreme Court has pointed out that imprisonment while taxes are under the appellate procedure is not correct, we expect the government to amend it as pointed out by the court and pass it with a simple majority,” he said.
“That is, if an appeal is pending, CGIR will not issue a certificate to initiate Magistrate Court proceedings.”
The Inland Revenue (Amendment) Bill is being taken up for its second reading in Parliament from Wednesday and forms part of the government’s wider revenue-base broadening drive that has already produced Rs. 600 billion in Q1 collections and a series of tax-loophole closures including the insurance policy withholding tax restoration.
