LAHORE - The Lahore Chamber of Commerce and Industry (LCCI) has demanded of the Federal Board of Revenue (FBR) to withdraw withholding tax on banking transactions and discretionary powers to the tax officials under Sales Tax Act 38-B and 40-B as these issues are lifting-up panic amongst the business community.

The demand was raised at a trader’s convention held under the umbrella of the LCCI. LCCI President Malik Tahir Javed, Senior Vice President Khawaja Khawar Rasheed, Amjad Ali Jawa, Nasir Hameed Khan, Tahir Manzoor Chaudhry, Fahimur Rehman Saigol, Naeem Hanif, Muhammad Bashir and representatives of trade and industrial associations also spoke on the occasion.

The LCCI president said that unjustified levies like withholding tax are discouraging the new taxpayers and obstructing the expansion of tax net. He said that the FBR chairman and Senate Standing Committee on Finance and Revenue chairman should take immediate notice of this longstanding issue that is causing trust deficit between the business community and the government. “New strategy will be evolved if these issues are not resolved by the end of this month”, participants of the conventions said.

The participants said that Section 40 and 38-B are being badly used by the FBR staff. They are visiting business premises to harass the business community. They not only take shocking measures to raise illegal tax demands without providing any supporting document but also carry all the available records with them. The participants of the meeting were of the view that teams from tax department should visit the markets, if indispensable, but they should immediately stop harassing business community. They said that if there is an urgent need for stock taking and ascertaining the Sales Tax liability of any particular business unit, the FBR officials should take association concerned or the Lahore chamber on board.

They said that indirect taxes are being removed gradually throughout the world bit in Pakistan these are contributing around 60 percent to the revenue despite the fact that expenses on this practice are higher than the collections. All the participants said that FBR should stop harassing filers as non-filers and ones outside the tax net are not accounted for at all which discourages businesses to come into the tax net. Registered businesses are required to comply with various departments involving a lot of financial and time resources whereas unregistered businesses are free from all such hassles.

They said that there are 3.5 million registered taxpayers out of which only around 1 million file their tax returns. The government should take all the measures to ensure filing of returns by remaining 2.5 million individuals and businesses. The government claims that it always acts as a facilitator but in this scenario it is entirely otherwise, they said.

They said that attaching bank accounts for recovery of outstanding dues is hampering business growth and tarnishing the business-friendly image of the government. They said that bank accounts should not be attached without prior notice to the taxpayer and after seeking approval in writing of commissioner in the light of reply submitted by the taxpayer. The recovery should be after the decision of the tribunal and not before that. They hoped that FBR will withdraw withholding tax on banking transactions and unlimited discretionary powers to the tax official in the larger interest of the trade and industry. Earlier, participants of the convention staged a protest against withholding tax and misuse of discretionary powers.