The Federal Board of Revenue (FBR) is likely to withdraw the requirement of filing of income tax returns on various persons that made mandatory during the latest federal budget 2013 – 2014 due to pressure on the government from business community. Sources in the Federal Board of Revenue (FBR) said that so far the decision had not been taken but strong trading lobby continuously pressurizing the government to take back the requirements, which would lead to documentation of those persons operating outside the tax base for a long time. The sources said that recently a meeting of FBR senior officials and trading community was held and traders made sure that if the condition was not withdrawn then they would hold country-wide protest, especially in Punjab which suppose to be stronghold of PML-N. It is learnt that the meeting of FBR and traders was held when Prime Minister was on US visit and the finance minister was also with him. The sources said that on protest threat some-one from the FBR made a call to Finance Minister for further instruction and after that it was decided that the date for return should be extended to November 30. FBR quarters were amazed over the decision taken around 10 days before the deadline of October 31 and they thought that if FBR planned to extend the date it should be made around October 30 so people would file some returns. Some FBR officials thought that it was political decision because PML-N did not want uncertainty in the Punjab that affect their votes. The sources said that it was still unclear that what the government is going to take decision because it had committed to broaden the tax base under the IMF new loan program. It is worth mentioning that the IMF team at present in Islamabad to review the outcome of quarterly performance at fiscal side for releasing second tranche by November-end. The government in the Budget 2013 – 2014 brought several classes of persons into the mandatory requirement of filing income tax return, including the salary persons, having annual income of Rs400,000. Under Section 114 of Income Tax Ordinance, 2001 the following are required to file income tax returns: “Return of income. — (1) Subject to this Ordinance, the following persons are required to furnish a return of income for a tax year, namely:– [(a) every company;] [(ab) every person (other than a company) whose taxable income for the year exceeds the maximum amount that is not chargeable to tax under this Ordinance for the year; [or]] [(ac) any non-profit organization as defined in clause (36) of section 2; [ ] ] [(ad) any welfare institution approved under clause (58) of Part I of the Second Schedule;] [(b) any person not covered by clause [(a), (ab), (ac) or (ad)] who,— (i) has been charged to tax in respect of any of the two preceding tax years; (ii) claims a loss carried forward under this Ordinance for a tax year; (iii) owns immovable property with a land area of two hundred and fifty square yards or more or owns any flat located in areas falling within the municipal limits existing immediately before the commencement of Local Government laws in the provinces; or areas in a Cantonment; or the Islamabad Capital Territory [;] ] [(iv) owns immoveable property with a land area of five hundred square yards or more located in a rating area;] [(v) owns a flat having covered area of two thousand square feet or more located in a rating area;] [(vi) owns a motor vehicle having engine capacity above 1000 CC; [ ] ] [(vii) has obtained National Tax Number [; or] ] [(viii) is the holder of commercial or industrial connection of electricity where the amount of annual bill exceeds rupees [five hundred thousand] [; or] ] [(ix) is registered with any chamber of commerce and industry or any trade or business association or any market committee or any professional body including Pakistan Engineering Council, Pakistan Medical and Dental Council, Pakistan Bar Council or any Provincial Bar Council, Institute of Chartered Accountants of Pakistan or Institute of Cost and Management Accountants of Pakistan.] [(1A) Every individual whose income under the head ‘Income from business’ exceeds rupees three hundred thousand but does not exceed rupees [four hundred thousand] in a tax year is also required to furnish return of income from the tax year.]” FBR sources said that if the authorities bow down before the demands of such people then the broadening the tax base would remain dream. The FBR in a policy reversal had already issued SROs in Sales Tax applying value added tax till manufacturers exempting retailers and wholesalers. The FBR sources said that IMF, which approved recently $6.7 billion against some restriction on Pakistan fiscal side to improve revenue and curtail expenditures, would be displeasure and it can stop the second tranche as many targets including the broadening the tax base were not achieved.
Posted on: Wed, 30 Oct 2013 20:20:58 +0000
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