Limiting tax exemption proposed to check double benefit

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ISLAMABAD: Federal Board of Revenue (FBR) has been recommended to limit exemption under income tax laws in order to put a check upon claim of double benefit.
Sources in FBR said tax managers had recommended for budget 2018/2019 to put a check on exemption allowed under Section 55 of Income Tax Ordinance, 2001.
The existing law under Section 55 states: “(1) Where any income is exempt from tax under this Ordinance, the exemption shall be, in the absence of a specific provision to the contrary contained in this Ordinance, limited to the original recipient of that income and shall not extend to any person receiving any payment wholly or in part out of that income.”
The tax managers proposed: “(1) Where any income is exempt from tax under this Ordinance, the exemption shall be, in the absence of a specific provision to the contrary contained in this Ordinance, limited to the original recipient of that income and shall not extend to any person receiving any payment wholly or in part out of that income.
(2) Where a person’s income from business is exempt from tax under this Ordinance as a result of a tax concession, then notwithstanding anything contained in this Ordinance: (i) any loss sustained in the period of the exemption shall not be set off against the person’s income chargeable to tax after the exemption expires, (ii) no depreciation or amortization shall be allowed to be carried forward for the assets used during this period, and (iii) no tax credit shall be allowed to be carried forward during this period under Part X of Chapter III of this Ordinance: Provided that the provisions of this sub-section shall not apply if the person gives an option in writing not to avail the tax exemption during any of the years for which it is admissible, at any time before the filing of return of income for the tax year in which such carry forward of loss, depreciation, amortization or credit is claimed for the first time.”