KARACHI: The Site Association of Industry (SAI) said that imposition of advance income tax at different stages of economic activity was being used by officials to artificially boost up revenue collection.
In a statement issued on Tuesday, SAI’s Taxation Sub-committee Chairman Saud Mehmood said that any withheld income tax was adjustable and refundable but the tax officials held it back to show higher revenue figures in their respective regions.
Critical of the successive governments’ policy towards advance income tax being withheld at every possible stage of trading activity, he said this was technically not part of the revenue collection but rather a liability to be paid back to the taxpayers.
Once this policy is corrected there will be no incentive to impose a plethora of advance taxes as they will not help meet revenue targets, Mehmood said.
He said it was redundant to impose withholding taxes on filers of tax returns in the presence of quarterly payment of advance tax under Section 147 of the ITO.
He urged that all withholding taxes should immediately be removed which will not only reduce the cost of doing business but also encourage non-filers to become part of the tax net, he added. However, he went on to suggest that for non-filers, withholding scheme should remain the same, continuing to be treated as an indirect tax on consumption just like sales tax.
A disconnect exists between policy and execution from the fact that rate of income tax was brought down from 35 to 30pc as part of a fiscal policy to spur growth by leaving a larger share of profits with private sector to reinvest, said Mehmood. “But unfortunately, a much larger portion of the private sector liquidity is blocked as advance income tax is not usually refunded on time,” he added.
