The Central Board of Revenue (CBR) briefed Finance Minister Shaukat Aziz on the ongoing budget exercise to make the tax-policy more investment-oriented in budget 2004-2005 on Monday.
CBR Chairman Abdullah Yusuf and his team of economic managers had reviewed budget proposals relating to sales tax, income tax, customs and central excise for fiscal 2004-2005 on Monday before going to Ministry of Finance to brief Finance Minister Shaukat Aziz on the initial sketch of budget proposals.
Sources told Business Recorder that the tax managers also analysed the revenue collection of Rs 351.7 billion during first nine months of the current fiscal. The strategy to meet the revenue target of Rs 510 billion by the end of current fiscal was also discussed threadbare.
The bifurcation of tax-wise target for the remaining three months was also reviewed.
Line members presented their budget proposals along with revenue implications.
Details revealed that the CBR has started scrutinising budget proposals floated by different departments and private sector. The proposals given by collectors, commissioners were also being examined.
One of the important initiatives taken on the customs side is the categorisation of Capital Machinery for the purpose of zero-rate of import duty from 2004-2005.
The CBR has sought the details from Customs House Karachi to submit list of capital machinery being imported by different sectors along with the revenue implications in case of zero-percent duty is introduced in budget.
On the sales tax side, the CBR has been actively working on the extension of GST to professional service providers and framed new refund procedure in the light of recommendations of private sector for amendment in the "Sales Tax Refund Rules 2004".
Other reform areas include simplification of law, amendment in Sales Tax Act, 1990 and sales tax rules/procedures; anti-evasion measures, withdrawal/ review of exemptions and possibility of identification of new services to be brought under the GST net, audit methodology for the existing services liable to sales tax and compliance by non-filers of sales tax.
On the issue of withdrawal of income tax exemptions, as per Income Tax Ordinance 2001, it is mandatory for CBR to take prior approval from the National Assembly for making any amendment in the Second Schedule of the said Ordinance.
The second Schedule of the Ordinance 2001 covers exemptions and tax concessions including exemption from total income, reduction in tax rates, reduction in tax liability and exemption from specific provisions.
The tax authorities require approval of the National Assembly for adding any clause or condition; omitting any clause or condition and making any change in any clause or condition of the Second Schedule of the Income Tax ordinance 2001.
Similarly, budget proposals relating to customs and central excise were also discussed.
It was agreed among the CBR members that one of the major thrusts of reforms was the removal of irritants. The tax laws should be amended in budget by making them simple, transparent and free of any possibilities of exploitation or abuse of authority. Along with amendments, the taxpayers must be aware and educated about them.
Private members spelled out their strategy regarding HRM, audit, taxpayer facilitation etc.
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