Lahore Chamber of Commerce and Industry (LCCI) on Thursday took up the issue of withholding tax on bank transactions with federal ministers, Parliamentarians and key government departments. LCCI President Sheikh Muhammad Arshad through a letter to MNA Pervez Malik, Chairman FBR Tariq Bajwa, Special Assistant to Prime Minister on Revenue Haroon Akhtar Khan, Federal Minister for Commerce Khurram Dastgir Khan, Federal Finance Minister Ishaq Dar, Federal Minister for Kashmir Affairs and Gilgit Baltistan Muhammad Barjees Tahir and Senator Raja Muhammad Zafar-ul-Haq, informed them of business community challenges particularly with reference to withholding tax on bank transactions.
As per LCCI proposals, LCCI chief said that withholding tax on banking transactions has created a tense situation which needs to be tackled through meaningful dialogue between the government and the business community. He suggested that the filers should not be charged withholding tax at all in any case and non-filers should be required to pay withholding tax as final liability at the rate of 0.20 percent on cash withdrawal of more than 200,000 per day only.
Arshad said that currently, the income of non-salaried individuals up to Rs 400,000 is exempted from tax. He proposed that the threshold of income of non-salaried individuals should be enhanced to Rs 600,000 from 400,000. Regarding the Wealth statement under Section 116, he said that its filing should be made mandatory for all individual taxpayers where declared income is Rs 2000,000 or more. He said that currently rate of corporate tax for Public/Private companies is 33 percent while this rate in countries like Afghanistan, Bangladesh, Bhutan, India, Sri Lanka, Turkey and China is 20 percent, 27.5 percent, 30 percent, 30 percent, 28 percent, 20 percent and 25 percent respectively. He said that keeping in view the above corporate tax rate in Pakistan should be reduced to at least 25 percent.
Tax Regularisation Scheme for business community should be introduced for existing and new (both) taxpayers wherein Rs 10,000 should be imposed for the businessmen declaring personal/business assets (liquid/fixed) to the tune of Rs 50 million and Rs 25,000 should be charged from the business people declaring assets of Rs 100 million or more, he mentioned.
"LCCI is of the view that this would help broaden the tax net only if government would not ask about, probe or scrutinise the source of income and will not conduct any audit of existing/new taxpayers for the last six years, if the taxpayers declare their income 20 percent more than the last year, he should be exempted from audit for the upcoming three years and government would accept the declarations as they are filed by the taxpayers," Arshad suggested.
He said that the traders who fall under SRO 608 should not be required to act as withholding agents irrespective of their amount of sales. He said that government in general and the Federal Board of Revenue in particular should realise the fact that revenue target should only be met if business community is facilitated.
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