Member, Federal Board of Revenue (Inland Revenue), Khawar Khurshid Butt, said here on Saturday that no genuine taxpayer would be harassed, and a committee comprising members of FBR and LCCI would be formed to sort out all tax-related issues.
Addressing members of Lahore Chamber of Commerce and Industry (LCCI) he said that he would hold meeting with the head of the FBR Intelligence Unit over the issue of harassment and facilitation to the taxpayers would be ensured at every cost as it is the very objective of the Federal Board of Revenue. He said that SRO 283 is actually a major revamping of zero-rated regime and certain anomalies are coming up due to this policy shift. However, he assured that all issues would be resolved with consultation of concerned stakeholders. He said that refund system would also be expedited so that the businessmen could be able to do their businesses with maximum ease.
LCCI President Shahzad Ali said that people are not willing to come into the tax net due to undue harassment by tax officials. Therefore, corrective measures are badly needed to encourage new tax payers. He said that no arrest or FIR should be registered against a taxpayer without giving him a show-cause notice and the chamber should also be taken into confidence during this process, or while investigating any tax fraud.
Moreover, the adjudication officer should not be below the rank of an Additional Commissioner. He said that refund system of taxes should be improved to encourage the businessmen to get registered with the tax department. The LCCI President also raised the issue of withdrawal of sales tax exemption given under SRO 549 on various items and especially on plant and machinery and their parts. He said that the decision would hurt industrialisation besides disturbing a number of sectors and suppliers of various goods. He proposed uniform rate of GST ie 12 percent on all products instead of various rates like 17 percent, 22 percent and 26 percent currently levied in the country.
He said that it was not justified to punish the buyer in case of sales tax default by the supplier. It is recommended that if the payment is made by the buyer through crossed cheque then he should not be held liable for any such default. He also urged the FBR to settle concrete audit parameters in consultation with the business community. The scope and rate of turnover tax under section 113 of Income Tax Ordinance, 2001 has been increased. The rate of 1 percent of turnover as minimum tax is very high especially for distributors and commission agents who do not even earn profit of 1 percent on turnover. The government has introduced electronic system for refund of sales tax and the same should be extended for income tax also. He also proposed that 2 percent CVT on sale/purchase of all properties should be reduced to 0 percent for land purchased for industrial use.
Shahzad also recommend that the omitted sub sections 2, 3 and 4 from section 148 of Income Tax Ordinance 2001 should be restored. He said that the LCCI has the concern that why tax is only collected from big cities of Pakistan while small cities and interior areas of provinces are not properly taxed despite having sufficient potential. The whole country including agriculture sector should contribute towards revenue generation, he said.
He proposed that income tax should be levied on all commercial electricity connections which shall be refundable or adjustable. Furthermore, in order to broaden the tax net, no new commercial utility connection should be allowed without having a valid NTN. "We need to bring to your kind knowledge that supplies for the paper industry and some synthetic fibres come from street pickings. Purchase from the scavengers (street collectors) should be recognised as a legal mode of purchase for sales tax.
As a step towards reducing chances of frauds through fake or flying invoices, we recommend that sales tax registration should be done only if two present sales tax registered persons endorse the application. This will help check the registration of non-business elements who later on issue fake invoices with connivance of the department officials and the brunt of this slackness of department is always faced by the taxpayers". Chief Commissioner Ansar Javed, Chief Commissioner Mustafa Ashraf and Chief Commissioner LTU Khalid Aziz Banth also spoke on the occasion.