The federal government has rejected three major tax-related proposals of the Senator Ishaq Dar of PML (N) which have not been made part of the amennded Finance Bill (2012-2013) Sources told Business Recorder here on Thursday that the Senate Standing Committee on Finance had approved three important proposals of the Senator Ishaq Dar during review of the Finance Bill (2012-2013).
The Federal Board of Revenue (FBR) had also agreed to these taxation proposals of the opposition to amend Income Tax Ordinance 2001 including introduction of tax difference of 5 percent between a private limited company and a public listed company to incentivise companies to opt for listing on stock exchanges from July 1, 2013. Senate has also approved these proposals and recommended the same to the National Assembly.
However, the amended Finance Bill (2012-13) has not incorporated the proposed amendments in the Income Tax Ordinance 2001 and the proposals of Senator Dar were not made part of the Finance Bill (2012-2013). If these proposals have been accepted by the federal government, the same has been incorporated in the amended Finance Bill.
Ishaq Dar proposed that the listed companies with free reserves of more than 50 percent of its paid up capital or the reserves of more than 50 percent of their paid up capital or the reserve as on June 30, 2013 'whichever is higher' must distribute at least 40 percent of taxed profit as cash dividends to the shareholders. The second proposal is that the tax difference of 5 percent between a private limited company and a public listed company should be introduced to incentivise companies to opt for listing on the stock exchanges of Pakistan from July 1, 2013.
Ishaq Dar also proposed amendment in the Income Tax Ordinance 2001 so that the assessment once amended should not be re-amended except under section 122 (5) of the Income Tax Ordinance 2001 and period for such re-amendment of assessment should be reduced to three years may be started from July 1, 2013. On the behalf of 17 Senators of the opposition parties, Senator Ishaq Dar presented budget proposals including amendments in the Income Tax Ordinance 2001 before the Senate Standing Committee on Finance.
During the review of the Finance Bill (2012-13) by the Senate Standing Committee on Finance, tax authorities had supported Dar's proposal with the comments that it is a very good proposal that the tax difference of 5 percent between a private limited company and a public listed company could be introduced to incentivise companies to opt for listing on stock exchanges. Similarly, the FBR also favours the proposal that the listed companies with free reserves of more than 50 percent of its paid up capital must distribute at least 40 percent of taxed profit as cash dividend. However, these proposals of Senator Ishaq Dar have not been reflected in the amended Finance Bill (2012-13), sources added.