ISLAMABAD: The government has taken the final decision to delete all income tax provisions from the Finance Bill, 2021, relating to the powers of the Inland Revenue officers to arrest any person under the proposed Section 203A (power to arrest and prosecute) of the Income Tax Ordinance, 2001.
It is reliably learnt that the decision has been taken at the top level and all relevant sections would be deleted from the Finance Bill.
Following section would be withdrawn from the Finance Bill 2021: Section 203A (power to arrest and prosecute); Section 203B (procedure to be followed on arrest of a person); Section 203C (special judges); Section 203D (cognizance of offences by special judges), and Section 203E (special judge, etc to have exclusive jurisdiction).
According to the sources, the Federal Board of Revenue (FBR) will suffer a revenue loss of Rs100 billion following withdrawal of budgetary proposal to impose FED on mobile phone calls and SMS @ Re1 per call (call exceeding three minutes), and Re0.10 per SMS.
The government will also withdraw some other revenue measures from the Finance Bill, 2021, having a revenue impact of Rs20 billion.
For instance, the exemption granted to the inter-corporate dividend would be restored under Section 103C.
Following withdrawal of these revenue measures, the total revenue loss would stand at Rs120 billion.
Sources said that the government has started examining alternate taxation measures to overcome this shortfall of Rs120 billion. First, the government is considering to withdraw the proposal of abolishing withholding tax on banking transactions. This WHT on banking transaction may be retained in 2021-22. Second, 30-35 percent increase in the Federal Excise Duty (FED) on cigarettes. Third, raise in the rate of the FED on beverages and aerated water.
These alternate budgetary measures would help in generating additional revenue of Rs120 billion to overcome revenue shortfall during the next fiscal year, they added.
Copyright Business Recorder, 2021