The income of regulatory authorities like Pakistan Electronic Media Regulatory Authority (Pemra); Pakistan Telecommunication Authority (PTA); Oil and Gas Regulatory Authority (Ogra) and National Electric power Regulatory Authority (Nepra) and other development authorities would be liable to tax under Income Tax Ordinance 2001.
Sources told Business Recorder on Tuesday that CBR has brought Pemra; PTA; Ogra; Nepra and other development authorities into the tax net in the budget. In this regard, the Board has issued a ''''clarification amendment'''' regarding taxation of Regulatory Authorities through Finance Bill 2007-08.
Sources said that the Board might also bring the development authorities, like National Logistics Cell (NLC) and Frontier Works Organisation (FWO) into the tax net applying the same provisions of the Ordinance 2001.
Giving the rationale, sources said that the regulatory and development authorities are taxable under the income tax law. On the other hand, Income Tax Ordinance 2001 is not clear about the taxability of these authorities neither being local departments nor government authorities.
The income of all the regulatory and development authorities is taxable under income tax law, and Article 165A of the Constitution. Similarly, regulatory and development authorities are also covered under the definition of Income Tax Ordinance 2001, but different views of stakeholders on taxation of income of these authorities have resulted in litigation.
According to sources, now the Board has issued the ''''clarifying amendment'''' in Ordinance 2001 to tax income of these authorities. This amendment has specifically provided that their income is taxable. Through Finance Bill 2007-08, a new proviso has been added in section 49 of Income Tax Ordinance 2001:
"Provided that exemption under this section shall not be available in the case of a corporation, company, a regulatory authority, a development authority or other body or institution established by or under a Federal law or a Provincial law or an existing law or a corporation, company or other body or institution set up, owned and controlled, either directly or indirectly, by the Federal Government or a Provincial Government, regardless of the ultimate destination of such income, as laid down in Article 165A of the Constitution of the Islamic Republic of Pakistan.". Section 49 of the Ordinance 2001 is related to income tax exemption to federal and provincial government, and local authorities.