FBR Member Customs Nisar and Member Inland Revenue Shahid are leading respective departments in ongoing deliberation
ISLAMABAD: The Federal Board of Revenue (FBR) has geared up deliberations to prepare proposals to reduce tax exemption in the upcoming Finance Act.
“Last year, the process started in the last quarter of the fiscal year,” a source told Customs Today. He added that the customs, Inland Revenue and Policy Wing have been issued instructions to propose required amendments in next finance bill.
“Basic objective of the deliberations is to cut the existing tax expenditures up to least half in volume,” the source said. He also said currently, there was Rs 430 billion tax exemption; income tax Rs 100 billion, sales tax Rs 250 billion and customs duty Rs 80 billion.
The source said that FBR Member Customs Nisar Muhammad Khan and Member Inland Revenue Shahid Hussain Asad were leading the respective departments in the ongoing deliberation and Inland Revenue and Customs had started work in this regard.
“FBR Chairman Tariq Bajwa has directed the departments concerned to finalise preliminary discussion by the end of December to enable Bajwa to hold further deliberations at his office and to move forward to Finance Ministry well in time,” the source observed.
“Customs Department has been asked to rationalise Statutory Regulatory Orders (SROs) which apply concessionary rates on vehicle import permissions to constitutionally posts and reduced duty rates on import of machinery for power sector,” he said, adding that Inland Revenue had been asked to improve tax regime and prepare required constitutional amendments be forwarded to government for inclusion in the upcoming budget.
The source said that Income Tax Department had been directed to leave the compulsory clauses of the Second Schedule of Income Tax Ordinance 2001 and others be repealed, because the schedule provided provisions for exemption to several incomes and taxes generated from power sector, charity organisations and allowances to civil and armed forces.
The source said that deliberation on reducing tax expenditure was necessary because the International Monetary Fund (IMF) mission would discuss proposals and findings at its upcoming session. The meeting is likely to be held in the first quarter of 2015.
