ITBA asks FBR not to issue controversial clarifications

The Income Tax Bar Association (ITBA) Karachi has asked the Federal Board of Revenue (FBR) to refrain from issuing controversial income tax clarifications from which it seems to treat the tax deduction on services pertaining to corporate taxpayers as minimum tax under section 153 of the Income Tax Ordinance 2001.
Sources told Business Recorder here on Wednesday that the ITBA has lodged a complaint with the FBR Member Inland Revenue Khawar Khurshid Butt on issuance of such kind of controversial clarifications for the income taxpayers and income tax circular has been superseded which was earlier issued without proper interpretation of tax laws. The ITBA was surprised that how the FBR has withdrawn its own circular of which interpretation was made two years ago.
According to the letter of the ITBA to the FBR, reference to the clarification amendments made in sub-section 6 of section 153 of the Income Tax Ordinance 2001, issued to the Chief Commissioners of LTU & RTOs to treat the tax deduction on services in respect of corporate taxpayers as minimum tax. This explanation of FBR is in suppression of earlier circular No 6 of 2009 dated 18/08/2009, which clarified that the tax deducted on services in respect of corporate taxpayers would be adjustable rather than considered as minimum or final tax and in case of non-corporate taxpayers (individuals and AOPs) tax deducted on services would be considered as minimum tax.
The said clarification is again a step towards shaking the confidence of the taxpayer as tax planning is a vested right of any taxpayer who prepare his tax returns on the basis of tax laws and circulars/notifications issued. However, if FBR feel that they had issued circular two years back without proper interpretation of the amendment they should wait for the Federal Budget, which is around the corner to propose this amendment in accordance with their wish and desire and could at least able to preserve fragile relationship with the taxpayers. The aforesaid change has clearly shown that FBR has no importance for this relation that is the reason they are creating confusions by issuing the clarifications just on their whims and fancies and to meet their unrealistic budgetary targets at the cost of existing taxpayers.
"We at the Bar strongly feel that the FBR should refrain from issuing such clarification and direct their functionaries to divert their energy towards broadening the tax base rather creating confusions by superseding their own circulars and clarifications to frighten the taxpayers instead of facilitating them as propagated by the FBR," ITBA added.