National chamber demands exemption on income of WPPF; WWF

KARACHI: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has demanded to exempt income of the workers’ profit participation fund (WPPF) and Workers Welfare Fund (WWF) as it benefits of their workers to build schools; hospitals etc.
The apex trade body said in its budget proposals 2018/2019 that a corresponding amendment should be made giving exemption to the income of WPP Fund established under the WPPF Act. Accordingly, it is proposed that the following sub-clause be inserted in Clause (66) above after sub-clause (xxxv): “(xxxvi) Workers Participation Fund established under the Companies profits (Workers Participation) Act, 1968.”
However about 40 billion rupees funds accumulated since 1971 are still to be utilized. Studies shows that around 75 percent of the total fund goes to the government of Pakistan and only 25 percent is being distributed to the eligible employees. Whereas the existing situation is that WWF is taxable at two percent and WPPF at five percent of profit under section 60A.
It suggested that The WPP Fund itself is not an entity engaged in any profit earning activity for the reason that the sums available to it are either to be paid to the workers or deposited with the government. It is a pass through entity and as such the relevant Act provided exemption to a WPP Fund duly protected under the income tax law.
It said that income of the Workers’ profit participation Fund is exempt under the WPP Fund Act, 1968, which was accepted under the Ordinance by virtue of a proviso to Section 54 of the Ordinance as it stood before an amendment brought through the Finance Act, 2008.
However, through the Finance Act, 2008, the proviso to Section 54 of the Ordinance was omitted. As a result exemption provided to the income of the WPPF Fund under the WPP Act lost its applicability, which appears contrary to the purpose of entire Scheme.

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