FPCCI advocates moving to normal tax regime

KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has advocated moving to normal tax regime from final tax regime.
In its proposals for budget 2018/2019, the FPCCI said that through Finance Act, 2012 the Government had a taken very positive step by inserting Clauses (41A), (41AA), (41AAA) in Part IV of the Second Schedule to Income Tax Ordinance, 2001 whereby, the commercial importers, exporters and service provider respectively were allowed to opt out from the final tax regime and file their returns under normal tax regime subject to following conditions:-
a) The minimum tax liability of importers should not be less than 60 percent of tax deducted on commercial import read with Sub-Section (7) of Section 148 of the Ordinance;
b) The minimum tax liability of exporters should not be less than 50 percent of tax deducted on export realization under Section 154(4) of the Ordinance; and
c) The minimum tax liability of suppliers of goods should not be less than 70 percent of tax deducted on supplies under Section 153(1)(a) of the Ordinance.
However, the Finance Act, 2014 reversed these amendments and inserted new Clauses from (56B) to (56G) in Part (IV) of Second Schedule to the Ordinance. Under these clauses taxpayer are allowed to file normal tax return instead of opting for final tax regime, subject to payment of minimum taxes, which are on a higher side than that of required under clauses (41A), (41AA) and (41AAA) deleted through Finance Act, 2014 and remains no more attractive.
At present the taxpayers are avoiding to opt out of final tax regime, because it created additional burden of normal audit without any substantial tax benefit.
The FPCCI proposed that the condition of minimum taxes specified in Clause (56B) to (56G) of Part IV of Second Schedule to the Ordinance, for all the taxpayers be reduced to 60 percent.

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