The business community is seeking that the minimum limit for turnover tax should be raised from Rs 5 million to Rs 10 million and the tax rate be reduced to 0.5 percent.
Sources in the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) told Business Recorder that the trade and industrial taxpayers have demanded that, in 2007-08 budget, turnover tax limit should be increased to Rs 10 million and the tax rate be reduced to 0.5 percent from the current 0.75 percent.
This would increase the tax base and would also help achieve Central Board of Revenue (CBR) ambitious target of Rs one trillion for next fiscal year.
Industrialists said that the present rates of income tax and sales tax and duties are on the higher side. These should be reduced, and rationalised. This would encourage the existing taxpayers to come forward with correct figures of income and would attract new taxpayers as well.
The CBR is receiving withholding tax in several utility bills from industrial, commercial and domestic consumers. This should be totally abolished.
It has further been suggested that withholding tax on imports should be reduced to 2 percent, and elsewhere withholding tax should be done away with and made adjustable, as in the case of industrialists, because the commercial importers can import industrial raw material for supply to small industries. Due to this, the problem of labour unrest would be solved.
If a taxpayer supplies goods then 3.5 percent withholding tax is being deducted. These rates should be reduced and be made adjustable.
They also demanded that withholding tax on utilities charges should be withdrawn, or made refundable, automatically.
Under section 148, industrial importers are bound to pay tax on their imports. This should be total and final. It is clarified in this section that the tax received on imported item will be treated as final tax.
According to conditions laid down under sub section 2(4)-A, for an industrial unit which manufactures cooking oil and is bound to pay advance tax under section 147. Besides cooking oil on the import of other raw material for its use, one has to pay the tax. It amounts to double taxation. It is, therefore, suggested that in these cases exemption certificate be issued, on written application, and its validity be at least for one year.
In computing income for income tax purposes, medical expenses should be allowed as straight deductions, without any limit and condition, and all conditions should be withdrawn.
Income tax and all federal taxes be slashed downward and rationalised, keeping in view huge and of various natures imposed by provincial governments, local governments, and unchecked hike in prices of petroleum products, gas, electricity, cements and all items.
It is suggested that discretionary powers of government agencies may further be curtailed so that transparency could be seen which would reduce corruption.