Matters relating to sales tax, income tax, FED: FY23 budget to envisage ‘one’ document for business community, general public

ISLAMABAD: Business community and general public would be able to have ‘’one’’ tax document in budget (2022-23) to deal with the sales tax, income tax, and federal excise duty matters from next fiscal year.

Sources told Business Recorder that some uniform procedures would be combined under the new Inland Revenue Code, combining Income Tax Ordinance, 2001, Sales Tax Act, 1990, Federal Excise, 2005, and Islamabad Capital Territory (Sales Tax on Services) Ordinance, 2001.

For instance, appeal procedure is the same in the sales tax and income tax.

The said appeal procedure would be combined under the new Inland Revenue Code for income tax, sales tax, and federal excise duty.

As the nature and charter of sales tax and income tax cannot be changed; therefore, the new document would have separate chapters of sales tax, income tax, and federal excise duty to deal with the taxation matters. Sales tax and income tax are different systems and cannot become common.

Under the ongoing exercise, the sections and provisions of the sales tax and income tax laws would remain separate.

However, the taxpayer can access one document to read all relevant provisions of sales tax and income tax.

The Federal Board of Revenue (FBR) Chairman, Dr Muhammad Ashfaq Ahmed, has given top priority to the simplification of tax laws.

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The formulation of Inland Revenue Code would harmonise all inland taxation laws and maximise facilitation of taxpayers.

The FBR will enforce a new harmonised and simplified Inland Revenue Code from July 1, 2022, combining Income Tax Ordinance, 2001, Sales Tax Act, 1990, Federal Excise, 2005, and the Islamabad Capital Territory (Sales Tax on Services) Ordinance, 2001.

The new law would ensure ease of doing business by removing multiplicity of taxing statutes and a plethora of rules and regulations devised to operationalise them.

The FBR, on domestic side, implements and enforces four major tax laws i.e. the Income Tax Ordinance, 2001, the Sales Tax Act, 1990, the Federal Excise, 2005, and the Islamabad Capital Territory (Sales Tax on Services) Ordinance, 2001.

These four tax statutes are then supported by equal number of rules compiled in voluminous books comprising the Income Tax Rules, 2002, the Sales Tax Rules, 2006, the Federal Excise Rules, 2005, and the Islamabad Capital Territory (Sales Tax on Services) Rules, 2001.

Resultantly, a taxpayer has to consult practically eight law books in order to engage with the tax system and pay off his/her tax liability.

Copyright Business Recorder, 2022