Tax relief for salaried class

It has been frequently observed that salaried persons are not considered for tax relief. The exemption threshold was increased to Rs400,000 from Rs350,000 in 2012-13. Since then, no relief was given to salaried class. It is fact that this only sector where 100% tax recovery is made since employers deduct the applicable tax at source on their monthly salary. FBR should consider this case on priority basis and take appropriate steps so that relief will be given to the salaried class in lower brackets.

Every citizen pays indirect taxes through utility bills, mobile cards, restaurant bills, hospital, hotels, air tickets etc. Hence, there is a double tax burden. After having incremental increase in salaries, employees of the categories of messengers, peons and drivers have come under taxable earners and have to fill the tax returns. It is highly deplorable that direct taxes are charged from clerical and non-clerical staff. The deductible tax is also burdensome the in presence of more than 11 Tax Slabs which should be reduced to 4 slabs. It is suggested that the government urges for tax culture prosperity and every citizen to file their returns. It is also proposed that relief in Direct Tax may be included when citizen pays indirect tax on utilities, cellular phones and all other services. Medical and educational expenses should also be exempted and this expenditure should be subtracted from taxable income

Wealth statement is a document which shows details of assets and liabilities of a person, his spouse, minor children and other dependents on a specified date. Every resident taxpayer filing a return of income for any tax year whose last declared or assessed income or the declared income for the year is one million or more should provide a wealth statement. This limit should also be increased.

FBR has made it mandatory for all salaried employees (government and private) having taxable income to file their income tax returns through E-Filing. This move has been taken in order to increase the number of tax returns. A number of tax experts condemned this move. A major reason is that a large number of salaried employees lie under the slab of PKR 400,000 – PKR 500,000, which could also create cases where even a peon of a corporate entity might have to file for income tax return for 2017. And now as per the laws of taxation, providing a wealth statement along with tax return filing will now be a compulsion for all salaried employees. As per FBR, they are expanding the tax net towards those who are currently non-filers. This theory is completely flawed as many employees are reluctant to file their returns since they do not have the expertise to draft a Wealth Statement. As far as salary employees are concerned, it is proposed that employer certificate should be enough and no further documentation should be required. This was practiced in the past very efficiently for about three to four years. In spite of enhancement of tax net, further tax burden is shifting on the shoulder of already tax paying members. E-filing system should be made more comfortable and convenient in consultation with I.T experts so that every citizen can file independently and conveniently.

Various associations of different business circles have raised their voice for obtaining relief in their respective sector such as Textile Association, Sugar Mills Association, Real Estate Association, Transport Associations, Retails business association etc., but nobody has stood up to say a single word for employees of the entire country.

In order to expand the tax culture, it is suggested that taxable income for Rs.1 million and above bracket should be enhanced since no enhancement was made for about 3 years. This should be coupled with submission of Wealth Statement to be required if total taxable income is more than 4 million. All indirect taxes should be incorporated into direct tax. Medical expenses and tuition fee of schools, colleges, universities and coaching centers should be exempted, hence may be deducted from taxable income. It is hope that these changes will be incorporated in the next Budget.

NISAR AHMED,

Karachi, May 11.

 

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