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ISLAMABAD: Finance Minister Shaukat Tarin's vision of a pro-business budget does not concur and reflect in the Finance Bill, 2021. This was stated by former Special Assistant to Prime Minister on Revenue Haroon Akhtar, and endorsed by tax expert Dr Ikramul Haq, while speaking as guests on “Paisa Bolta Hai” with Anjum Ibrahim, on Aaj News, here on Sunday.

Commenting on the controversial Federal Board of Revenue (FBR)'s proposed powers to arrest, Akhtar said, "Shaukat Tarin is very pro-business and says good things but I have a serious concern, his mindset tells something else and what is actually in the bill reflects a different mindset. So, I cannot see coordination between the policy maker and the budget document writer."

"What the policy maker -- the Finance Minister, is saying is not depicted in the budget. It is absolutely opposite to it," he remarked.

The government is bringing back the "draconian measures" and shifting away from documentation.

The powers to arrest will make the FBR more powerful than the NAB, which would be counterproductive and result in harassment.

The government has to bring serious changes in the Finance Bill to make it practicable, he added.

Akhtar stated that the government has to take away proposed powers of tax officials to arrest anyone from the Finance Bill 2021.

Akhtar stated that 90 percent of the budget document is prepared by the FBR and it seems that the document has not been seen by the policy makers.

"I think Dr Waqar Masood is not an expert in revenue," he was of the opinion.

Akhtar stated that the government move to charge sales tax on sugar on the basis of printed retail price is not workable.

The tribal areas are now part of the KPK and exemptions given to tribal areas are grossly misused by the manufacturers of counterfeit cigarettes, ghee and cooking oil, and the steel sector.

He said that the government has claimed that the budget is growth oriented. However, the budget does not reflect any measures, which would lead to growth as claimed by the government.

Tax expert Dr Haq stated that the tax officials cannot be investigators as well as prosecutors at the same time, which is also in violation of Article 10A that ensures fair right of trial and due process of law. He said that under the proposed powers of arrest, there will be an atmosphere of fear and harassment further destroying the existing businesses and future investment.

The National Accountability Bureau (NAB) has done the same thing of arresting persons before investigating the cases. He referred to Senator Sherry Rehman, who said before the Senate Standing Committee on Finance that through the proposed powers of arrest, the government wanted to make FBR into a mini-NAB.

Dr Haq stated that Shaukat Tarin has guaranteed he would personally give approval of arrest, but the finance minister is part of the executive and not the judiciary.

Waheed Shahzad Butt, a tax lawyer, stated that the government has silently granted status of the “Industrial Undertaking” to the telecom companies for extending huge tax benefits through Finance Bill 2021-22. Large Taxpayer Units (LTUs) have repeatedly pleaded their cases in courts that the telecom companies as not being covered under the definition of industrial undertaking.

The FBR's powers to arrest and 100 percent deposit of tax in appeals would be withdrawn during the final passage of the Finance Bill 2021.

Butt stated that the Finance Bill 2021 has withdrawn some major documentation measures.

Certain withholding taxes were contributing negligible amounts of taxes but maintaining records of taxpayers. These withholding taxes have been withdrawn in the budget.

The tax lawyer suggested that the government should give compensation of 25 percent of the involved tax in cases where the wrong recovery of 100 percent has been made by the assessing officials. This condition should be made part of the Finance Bill 2021.

Dr Haq said that the government has proposed to omit clause (139), Part-I of the Second Schedule (Exemption) of the Income Tax Ordinance 2001.

Under the said clause, exemption is available to any medical allowance received by an employee not exceeding 10 percent of the basic salary of the employee of reimbursement of actual expenses with proof. The only benefit of medical reimbursement or free medical facility left with salaried class is being withdrawn by the government.

The sudden withdrawal of the said exemption would take the salaried individuals to the higher slab of income tax, which would increase the burden of taxation on the salaried class.

On this, the FBR's clarification referred to clause 39 instead of clause 139, which was abolished in the budget.

Dr Ikram stated that the Finance Bill 2021 has proposed that the FBR can recover 100 percent tax from the taxpayer in case the decision of Commissioner (Appeals) comes in the favour of the tax department. This provision is against the right to justice which is a constitutional right.

Copyright Business Recorder, 2021


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