The government has introduced a special procedure for tax assessment of traders through a simplified tax return, especially designed for non-filers. Sources told Business Recorder that the Federal Board of Revenue (FBR) on Friday informed the Cabinet''s Economic Co-ordination Committee (ECC) that a new section 236P has been introduced in the Income Tax Ordinance, 2001 through the Finance Act, 2015.
The section was introduced to levy and collect an adjustable advance income tax at the rate of 0.6 per cent on all banking instruments and other modes of transfer of funds through banks in the case of those who didn''t file income tax returns. However, on the demand and agitation of business community, including various trade bodies and trade associations, the rate was reduced from 0.6pc to 0.3pc and that remained effective till December 31, 2015. The said rate was reduced to provide an opportunity to the trade associations to articulate the problems of non-filers, to file their income tax returns and register with FBR.
The Ordinance also empowered federal government to further extend the period during which the reduced rate of 0.3pc may continue on the recommendations of ECC. The ECC was informed that different trade associations have requested a further extension in time ostensibly because FBR is engaged in dialogue with trade bodies on various issues, including the issue of simplification of tax return format.
Sources further informed that FBR contends that discussions with trade bodies have now concluded and a special procedure for assessment in respect of traders has been finalised for which a simplified return for non-filers is being designed on the basis of which traders will file their returns. It was, therefore, proposed that the period of applicability of 0.3pc withholding tax on banking transactions be extended till January 31, 2016. The ECC was requested by FBR to recommend an extension in time period for 0.3pc reduced rate up to January 31, 2016 to the federal government. The ECC meeting presided over by Finance Minister approved the proposal submitted by the FBR.
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