Lahore

The government has decided to reduce the income tax ratio of wholesale dealers and stockists by up to 70 percent in more than 15 sectors on recommendations of Finance Ministry’s Income Tax and Sales Tax Committees consisted of mostly business community’s representatives. Besides, the government has also decided to introduce single-page tax return farm to facilitate illiterate traders so that they could fill the farm without assistance of any lawyer.

The sectors included sugar, flour, chipboard, cement, steel, all food items, pulses, textile etc, the dealers of which were earlier attempted to avoid pay income tax due to high ratio.

The FBR officials said following a series of shutter down strike by the traders across the country the government constituted committees to reform the taxation system with a view to facilitate traders so that they could be convinced for payment of tax willingly.

They said that government is committed to continue with 0.3 percent WHT on all banking transactions for non-filers. However, they added the government is seriously thinking to withdraw the levy for filers on cash withdrawal while there is already no tax all banking transactions for them.

On the recommendation of the committees, the government, in principal, has agreed to reduce income tax ratio of wholesale dealers by around 70 per cent, as their profit margin was very thin while their income tax ratio was very high, observed Muhammad Ali Mian, the member of Finance Ministry’s Income Tax Committee.

Muhammad Ali Mian, also the farmer LCCI President, stated that the recommendations, after approval, have now been sent to ministry of law and after different process it would be implemented through presidential ordinance at the end of this month.

The committee after consultation will also send more sectors to reduce their income tax ration so that all dealers of all sectors could willingly pay their income tax. He said that earlier income tax ratio of wholesale dealers was more than their profit margin. Traders used to show their sale very low to avoid income tax.

Regarding tax return farm, he said that one page tax return farm is being introduced which was consisting of 12 pages and its requirement would be so simple that an ordinary trader with basic education would himself fill the farm in very short time.

The PML-N Traders Wing Punjab president Muhammad Ali Mian said that govt is going to cancel all anti-traders acts at the end of the this month. Member income tax committee of finance ministry said that govt has understood that tax base cannot be enhanced without announcing business friendly policies. All acts regarding investigations and inquiries of trades which cause harassment among traders will be abolished. “Audit and raids are creating fear in businessmen and this system will be changed and positive things will be introduced.”

It is to be noted that through the Finance Act 2015, a new section 236P was introduced in the Income Tax Ordinance 2001. This section envisages 0.6% adjustable withholding tax on all banking instruments of more than Rs. 50,000/- per day issued by an account holder who has not filed income tax return for tax year 2014.

Business Community expressed its reservations on introduction of this adjustable Withholding tax on non-filers. On the directions of Finance Minister Ishaq Dar, negotiations were started with the business community.

On 8th and 9th July, 2015, meetings with the business community were held in Ministry of Finance and FBR. On 9th July, 2015, an agreement was reached between FBR and business community during a meeting chaired by the Finance Minister in FBR. In pursuance of the said agreement and as per directions of the Finance Minister to hold meaningful parleys with business community three Committees were constituted on 27th July 2015 [Income Tax Committee, Sales Tax Committee, and Communication Committee.