ISLAMABAD: The forceful arguments by the Chairman Federal Board of Revenue Nisar Mohammad Khan on Tuesday successfully grabbed support from Senate Standing Committee on Finance and Revenue in favour of stance on Money Bill, Income Tax (Second Amendment) Bill 2015.
On October 31, President Mamnoon Hussain promulgated an ordinance to further amend the Income Tax Ordinance 2001. The clause-II of Article 89 of the Constitution requires the presentation of this said ordinance before the either house of the parliament for either approval or extension in the tenure for the promulgation of the ordinance.
A day earlier, on Monday, committee members raised numerous objections on the nature, formation, timing of promulgation as well as others of the said ordinance.
However, Chairman FBR Nisar Muhammad Khan played a an effective move and invited the committee to lunch on Tuesday at the FBR in the name of an informal meeting to address the reservations and concerns of the members.
Chairman Committee Salim Manviwala along with Senators Sardar Fateh Mohammad Hassani, Mohsin Aziz and Talha Mehmood attended the informal briefing.
According to Senators, Chairman FBR, is an honest and hardworking government officer and he effectively advocated FBR’s stance and addressed almost all the concerns of the committee members. Therefore, committee will finalize its recommendations in next few days.
Senator Salim Manviwala told Customs Today that committee took up the issue in detail with FBR chairman and his team. Therefore, committee will propose at least four amendments in the said ordinance including granting exemption to all sectors instead of restricting it up to twelve sectors alone.
Moreover, he said that committee would also propose amendment in the tenure of validity of the ordinance from July 2015 to June 2016. Similarly, we have also sought statistics of revenue collection under 8% and 2% duty separately” he added.
Senator Mohsin Aziz also told Customs Today that FBR Chairman removed almost all concerns by dint of his forceful arguments, which proved rightly as correct. Due course of his briefing,
Chairman Nisar Muhammad Khan agreed to add other sectors also under this ordinance and also promised to take all out necessary measures in next budget” he added saying that FBR Chairman also committed to take all concerned sectors into confidence through a comprehensive consultative process.
Reporters were not allowed to cover this informal meeting therefore a well-placed official source at FBR told Customs Today that Chairman Nisar Muhammad Khan said that article 77 of the constitution allowed the state to impose new taxes as well as change the existing ratio of taxes.
Regulatory duty was levied under Customs and Excise Act. He further added that no new SRO had been issued in last two years as well as no regulatory duty was levied on import of machinery.
It is pertinent to note here that ordinance proposed changes included adding clause 94 to Part IV of 2nd Schedule to the Income Tax Ordinance read with changes brought in section 153 of the Income Tax Ordinance;
Minimum tax is made adjustable for maximum of 5 years for the following sectors (Companies not included in clause 94 i.e. sectors not given below cannot opt for such adjustment) freight forwarding services, air cargo services, courier services, manpower outsourcing services, hotel services, security guard services, software development services, tracking services, advertising services (other than by print or electronic media), share registrar services, engineering services or car rental services.
Under sub-section 4A added to section 153 an application (irrevocable and in writing before the November 15, 2015) to this affect has to be made to commissioner for choosing option of adjustability (by offering its accounts for audit within 30 days of filing of return for tax year 2016) and even in case such option a minimum tax at 2% must be paid and that also in advance on the basis of turnover of corresponding period of immediately preceding period.
This option is applicable only for tax year 2016 now only Tax payments enjoy exemption from (collection of) withholding of tax under section 236-P which after change looks like “Advance tax under this section shall not be collected in the case of payments made for Federal, Provincial or local Government taxes”.
