The harmonisation of income tax and sales tax laws would increase number of taxpayers; improve record keeping and strengthen combined audit of sales/income tax, resulting in overall increase in revenue collection.
It has been learnt here on Monday that the FBR has constituted special committees to review the tax laws for harmonisation of income tax and sales tax in a systematic manner. In long term, this would have positive impact of revenue collection. The FBR would submit draft legislation before the Cabinet or Parliament, for further synchronisation of income tax and sales tax, if required.
The FBR has taken many steps to harmonise tax laws. The alternative dispute resolution (ADR) laws have been harmonised. Other measures implemented included harmonisation of penalties/additional taxes regime; time period for adjudication and appeals.
Following integration of sales tax and income tax laws, the books of accounts maintained by the income tax department could effectively be used by the sales tax officials. Secondly, sales on the income tax and sales tax sides would also be verified effectively.
Under section 4 of the Federal Board of Revenue Act, the Board shall exercise powers and perform all such functions that are necessary to implement the tax administration reforms. This section has wide scope for implementation of reforms including harmonisation of tax laws. It has been agreed between the FBR and the IMF that the government will submit, by end-June 2009, draft legislative amendments to parliament to harmonise the income tax and GST laws, including for tax administration purposes.