Overseas Investors Chamber of Commerce and Industry (OICCI) has proposed the Federal Board of Revenue (FBR) to impose withholding tax on procurement of agricultural produce and make it mandatory for the agriculturalists to file income tax returns and wealth statements in upcoming Budget (2013-14).
Sources told Business Recorder here on Friday that the FBR is examining proposals of the OICCI for consideration in budget (2013-14). According to the budget proposals of the OICCI, agriculturists should file income tax returns and wealth statements. Moreover withholding income tax may be imposed on agricultural produce collected at the time of procurement.
Secondly, all individuals, traders and organisations earning income in excess of the prevailing threshold should file income tax return and statement of net wealth. In case the earned income falls under the exempt category then exemption may be claimed separately. This will result in more accurate information on income being generated whenever the respective exemption is withdrawn. Thirdly, the FBR should be able to seek details of all customers of financial institutions whose account shows turnover in excess of Rs one million during the year.
Fourthly, the section 111(4) of the Income Tax Ordinance should be amended to restrict tax free inward foreign remittances to a maximum of $10,000. Fifthly, the culture of Amnesty Schemes should be completely eliminated as it discourages the honest taxpayers. It said that the OICCI believes that tax reforms and revenue generation is not possible in Pakistan without certain basic conditions being fulfilled. Political will to undertake reform and hence parliament’s approval and support is critical.
Tax reforms should be an ongoing process and tax policies should change to adjust to changing economic structures. Instead of putting much emphasis on annual budget exercise, FBR should develop, share and approve a 5 year tax and revenue enhancement strategy. All future specific decisions should then emanate from this strategy, it said. There cannot be much disagreement on the fact that tax base needs to be “broadened”. This implies that all exemptions given for tax and duty payments, other than those impacting the poorest segment of the population and basic commodities should be withdrawn.