The exemptions and concessions to certain classes of income or persons should be abolished and the tax be imposed on all segments of the society. This was stated by Ali A Rahim, director, Baker Tilly at the pre-budget seminar, which was jointly organised by Income Tax Bar Association (ITBA) and Pakistan Tax Bar Association (PBTA) held at RTO auditorium on Saturday.
He said the capital gain on sale of properties should be reintroduced by the provincial governments and the collection of the tax should be handled by the Federal Board of Revenue (FBR) and then transferred to the provinces.
He said the taxpayers should be given incentive, if they give documented bills for sales and supply, contracts or services and proposed that the threshold to deduct withholding tax on the cash withdrawal from banks should be increased from Rs 25000 to Rs 50000.
He said the group companies, which share common expenses reimburse the same to the company that actually pays the expenditure, after deduction of the relevant tax. Therefore, it is suggested that reimbursement of expenses, between group companies should be exempted from the deduction of tax to reduce the cash flow burden, he added.
Earlier, Adnan Mufti, partner, Shekha & Mufti in his presentation suggested that the duty on dutiable services especially for banking sector, which involve public money, may only become payable to the state when the same is recovered by the banks and Non Banking Financial Institutions (NBFI).
He said that the value of dutiable services is the total amount of charges for the services. However, banks and NBFI, a major chunk of income on no fund services like credit cards, etc, is accrued on every single day of default. Such income is seldom realised to the bank and ultimately becomes irrecoverable and the existing law does not cater the situation.
He said the registered person could be penalised with default surcharge at 18 per cent per annum, if he failed to pay off the tax liability by due date. On the other hand, failure of the department to pay off due tax refunds in time only cost it at 6 per cent per annum.
Keeping the rate of inflation, cost of funds and natural justice in view, the interest on delayed refund should be enhanced to at least at 12 per cent per annum. Israr Rauf, director general, RTO, Abdul Qadir Memon, President, PTBA and large number of members were also present on the occasion.