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ISLAMABAD: The government should introduce a case settlement scheme for out-of-court settlement, implement Computerised National Identity Card (CNIC) condition with increase in its limit from Rs50,000 to Rs100,000, abolish withholding tax on cash withdrawals and restrict electricity subsidy to sales tax registered industrial and commercial consumers.

Former chairman Federal Board of Revenue (FBR) and leading tax expert Shabbar Zaidi has sent these budget proposals (2021-22) to the federal government for consideration in the next federal budget.

Zaidi stressed the need for implementation of CNIC condition.

In 2019, a provision was introduced that all purchases above Rs50,000 will be required to provide a CNIC card of the purchaser.

This was very strongly resisted by traders for vested interests.

The proposal lies in law but deferred through SRO.

It should be implemented at once with the limit to increase from 50,000 to a larger amount say Rs1,000,000.

He proposed that a scheme is introduced, whereby, taxpayers are provided a chance to settle their cases out of court by paying 25 percent to 50 percent of the demand without penalty with matters having been decided against them at the Tribunal and case is on appeal.

This will be on subject to subject basis; with a condition that future incidence will be determined on the basis of a system designed for the future.

Leading tax expert proposed abolition of tax withholding on cash withdrawal.

This tax, if existing in any form, is to be withdrawn and instead of the same it should be made mandatory that any account where average balance over a period of year exceeds Rs20 million will be required to submit NTN, otherwise, there will be an adjustable withholding at the rate of 10 percent on the sum of credit entries.

At present, consumers especially “industrial and commercial” are provided “subsidy” in tariff on the supply of electricity.

There are around 400,000 such consumers; however, less than 100,000 are reportedly registered in sales tax.

It should be made mandatory that reduced tariff will only be available to those industrial or commercial consumers who are registered with sales tax authorities.

This will change the paradigm of both subsidy and tax.

Zaidi proposed that there should not be any final tax on inter-corporate dividend.

It is actually double taxation.

Tax should be withheld at source on all dividends and if there is any business income of the recipient then the withholding should be adjusted against that tax.

He also proposed that the Foreign Exchange Regulation Act, 1947 and Protection of Economic Reform Act, 1992 be scrapped immediately and a law in line with Foreign Exchange Management Act of India be introduced.

Listed companies are allowed to bring and send out foreign exchange without any extra regulation.

It is proposed that all listed companies be exempted from withholding tax requirement subject to proper filing of monthly accounts within two months to tax authorities.

Listed companies being fully documented sectors should be exempted from minimum tax under Section 113 and Section 113A and others.

He further proposed the government to expedite processes of automated point of sales (POS) system for larger retailers and Track and Trace System.

He also proposed that the SRO 405 (I)/2021 should be revised and almost all the provisions of the multilateral instruments be introduced especially in relation to the UAE and Mauritius.

There has to be gradual evaporation of 5,000 rupee note.

A time limit be prescribed up to which Rs5,000 note will be valid say June 30, 2022, and in the meantime, the same can be exchanged with bank.

This is completely different from the Indian Scheme, Zaidi added.

Copyright Business Recorder, 2021

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