Federal Board of Revenue (FBR) is reviewing all fixed tax schemes for withdrawal of fixed regimes, which failed to achieve the desired results in coming budget (2017-18). It is learnt that the fixed tax schemes like scheme for developers and builders would be withdrawn in coming budget. The scheme under final tax regime (FTR) was traded at the cost of documentation of the economy. Large Builders and Developers groups got away without declaring their expenses and incomes.
Exemptions from withholding of income taxes were availed on the plea that their income is subject to FTR, which resulted in loss of valuable revenues which were earlier collected and deposited by withholding agents. In this regard, exercise is underway to identify all those fixed tax schemes where sectors/industries have not deposited the due amount of taxes as promised during 2016-17. According to sources, budget makers are examining a proposal to draft a Customs Amnesty Scheme for those importers where adjudication authorities have adjudicated cases and imposed fine on the importers under Customs Act 1969. The importers have contested the cases at the level of judicial fora like customs appellate tribunal or high court etc. The FBR will work the amount involved in such cases of litigation, which has been stuck-up in courts. If the budget makers think that some concessionary rate of tax be offered to importers, then such kind of Customs Amnesty Scheme would be finalised. In case policy makers agree with the scheme, it could be announced in budget or next fiscal year.
While new incentives for agriculture and domestic industries are being finalised, the sources said that the rate of sales tax would not be changed in the coming budget (2017-18). Sources said that some major changes in tax laws would be introduced for expanding the tax net, they added. Tax Reform Implementation Commission (TRIC) has recommended that without filing of income tax returns none of following should be allowed: Issuance/renewal of passport; commercial/industrial electricity, gas and water connection; three phase residential electricity connection; registration / transfer of property measuring 250 square yards/ 10 marlas for houses in rating areas and above 2000 square feet in Apartments/flats (exceptions for inheritance, gift within family) and purchase/sale/transfer of car/vehicle of 1000cc or above.
In this regard, exceptions from return filing may be given for non-residents not required to file return; education/medical purposes; dependent ladies/ Widows; pensioners; persons under 21 years age, in this case tax return of sponsor required; gift within family, spouse, children and disconnection of mobile connection if bill on all connection of a person exceeds Rs.24,000/36,000 per annum and return is not filed.
TRIC has also recommended a concept of "Self Employed Tax Preparer Scheme to Increase Tax Base". The Tax Return Preparer Scheme (TPS) proposes to train nearly 2000 graduates across the country at the AIOU centres through distance learned. The cost of training will be borne by the FBR/ Income Tax Department. Graduates who complete the training successfully will be issued a certificate & a unique identification number which will authorise them under the Income Tax Ordinance, 2001 to work as self-employed Tax Return Preparers.
TPS will receive 3% of the tax paid on the returns prepared & filed for every new assesses in the 1st year (subject to a maximum of Rs1000/), 2% in the second year and 1% in the third year and Rs 250 for the returns prepared & filed for the old assesses who pay tax of at least Rs 1000 or more.
The major advantages of scheme would be that it would create self-employment opportunities for about 2000 youth in First phase. It would assist FBR in increasing the tax base of small and marginal tax payers and stop filers. This scheme will align with government objectives of creating self-employment opportunities. This scheme will reach out to taxpayers in small cities/villages and it will educate people in tax and impart technical knowledge, TRIC recommendation added.