The Multan Chamber of Commerce and Industry (MCCI) has proposed amendment in the existing income tax ordinance 2001 to make it friendly for the taxpayers. It also suggested appropriate changes to keep check on the use of powers of the Income Tax authorities with reference to their service record.
Further, it should not question new investors' sources up to an investment Rs5 million to further encourage them. The President, MCCI, Khawaja Muhammad Jalal-uddin Roomi said, 'We have submitted suggestions and proposals to bring good changes in the existing income tax laws and that would bring positive improvements in the taxation system.
He also viewed that the existing 'Small Companies under u/s 2(59A) should be allowed the benefit of 20 percent corporate tax and exempted from withholding tax. Moreover, the profit should not be taxed in order to get further investment into similar type of assets while the department employees should be barred from providing constancy services through legal provisions.
Roomi further proposed to bring the Appellate Authorities of the Taxation under the Ministry of Law, Justice and Parliamentary Affairs so that they could decide appeals without any influence.
Furthermore, in order to avoid uncertainty, the amendments in the law should always be for the forthcoming tax period. He also preferred to cut down corporate tax rate equivalent to non-corporate sector that was now being received at the rate of Banking company which was 35 percent, Public company 35 percent, Private company 35 percent, small company 20 percent, individuals and AOP 25 percent.
Any amount received as loan, advance or gift (in cash) by an assessee other than a crossed cheque drawn in a bank or through a banking channel from a person holding NTN, is deemed to be the income of the assessee u/s 39(3).
The MCCI President maintained that the provision was putting the taxpayers in extra-hassle as the tax authorities strike on the transaction without classifying the nature therefore forcing the company liable to pay minimum tax.
The corporate sector, therefore, remains in disadvantageous position. Further, the MCCI proposed that minimum tax be withdrawn from the companies or levied on all type of assesses. After amendment through Finance Act 2007, retailers were being assessed by two regimes under sections 113A and 113B at new reduced rates.
The MCCI hoped that after the amendment, they would not be entitled to claim any adjustment of withholding tax collected/deducted under any head. Section 114 of ITO must be amended and Return Forms introduced should be at least for three years. The corporate taxpayers will be required to file returns of income and withholding tax statements electronically by the amendment in Finance Act 2007 and Section 114 (2b) should not be applied on them. Additionally, Section 122 needs to be reviewed in the light of following situations: After the amendment of assessment, the Commissioner is empowered to make further assessment.
The MCCI suggests that facility of automatic stay of payment of Tax under Section 127 and 131 should be given to the appellants in pending appeals before the CIT (A) and ITAT to avoid undue hardship.
There should be a time limit to dispose off appeals so that uncertainty caused by the tendency is removed. Changes have been made in Section 130(4) of Finance Act 2007. Wherein commissioners need at least five years of experience while the Accountant Member of the Tribunal should be a qualified chartered accountant having at least ten years of experience in tax practice so that he may understand the accounts and consequently, play his role properly.
The company, in the capacity of withholding tax agent, should be allowed tax credit of 10 percent of the tax collected and deposited by them in the Government treasury.
Also the Section 133 of the Income Tax Ordinance 2001 provides reference to the High Court where Appellate Tribunal has made an order on an appeal u/s 132. The reference should be substituted with an appeal to the High Court to facilitate the taxpayers, as it was relatively a simple course. The Section 155 (2) should be deleted because it is contradictory/ against the tax reform policies. Through Finance Act 2007 U/s 159(3)(4) and (5) that have been newly added the Board, were empowered to change the rates of withholding taxes. Roomi termed these powers extra-constitutional, as the board being a regulatory authority should not hold such capacities.
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