LAHORE: Kashif Anwar, President of the Lahore Chamber of Commerce and Industry, expressed concerns over the Finance Act 2024 and urged the government to reconsider certain policies. He said that without these changes, the business sector would be discouraged, businesses might move abroad, and there would be a decline in exports and remittances.
He shared these views during a seminar organized by the Lahore Chamber on the Finance Act 2024. Umar Zahid Mir also addressed the seminar, and executive committee members of the Lahore Chamber were present.
Kashif Anwar highlighted that the new Finance Act has increased fines and duties, creating many challenges for the business sector. He stated that the business community is not afraid of paying taxes and duties, but these should be determined based on ground realities and the convenience of the business community. He emphasized the importance of documentation, which hasn’t been fully achieved yet, despite moving towards digitization. Instead of imposing additional taxes on those who are already paying taxes, the tax net should be expanded. He pointed out that it’s essential to understand why people avoid coming into the tax net. Those willing to join the tax net may also refrain due to existing issues. He mentioned that policy inconsistencies are creating numerous problems.
The President of the Lahore Chamber made it clear that it is not feasible for retailers to adopt the Point of Sales (POS) system. Retailers without the necessary resources, awareness, and systems cannot implement this system. He stressed that running a business under such difficult conditions is impossible. While the youth already want to move abroad, now even the industry is shifting out. He pleaded with the government to reconsider its policies to prevent the closure and relocation of industries.
Chartered Accountant Umar Zahid Mir discussed various aspects, including export goods, builders and developers, tax rates on salaried individuals, minimum tax on special economic zones, tax credit, rate of default surcharge, sales tax, input sales tax, federal excise duty, petroleum levy, surcharge, and fines. He stressed that the government should address the business community’s concerns to avoid further economic issues. He explained significant amendments in the Finance Act 2024 in his presentation. According to these amendments, individuals and associations of persons (AOPs) with an annual income exceeding Rs10 million will be subject to a 10% additional income tax surcharge. Employers must deduct this surcharge from employees’ salaries. However, this surcharge will not apply to income under the final tax regime or special tax rates.
For professionals/firms not covered by any law or regulatory body rules, the maximum tax rate has been increased to 40%. Exporters will face a 1% advance income tax, collected by specific withholding agents at the time of export income realization. He highlighted that the country currently has 12 million NTN holders, but due to the complex tax system, only 4.5 million have filed their returns, which is a significant concern for the government, indicating a need to simplify the tax system.
Umar Zahid Mir mentioned that exports have been brought under the normal tax regime, creating harassment issues, while a 1% turnover tax on exports will still apply as a minimum tax. At the end of the year, additional taxes will be collected under the normal tax regime. He explained that a new tax system has been introduced for builders and developers, taxing profits from construction and development activities. Government institutions engaged in housing development are exempt from this system. The new scheme for builders and developers imposes a predetermined profit and tax rate of 10% to 15% on total incoming capital, but under section 111, this imposed rate can be considered insufficient proof in case of additional profits.
Income tax commissioners, who used to issue complete exemption certificates under the old law for exempted income, can now grant a maximum exemption of only up to 80%. He also expressed concerns over the new two-tier appeal system implemented under the Finance Act, stating that it will fail to achieve the government’s objectives of reducing litigation and curbing corruption. Particularly, the condition of a 30% demand for a stay from the High Court and not returning it even if the case is won in the High Court will erode taxpayers’ confidence.
Copyright Business Recorder, 2024
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