ISLAMABAD - Opposition parties on Monday blocked the government's attempt to clear amnesty scheme for the traders from the National Assembly's standing committee on finance.

The committee members of opposition parties including PPP, PTI and MQM expressed reservations on the government's move to pass 'The Income Tax (Amendment) Bill, 2016' in haste. Committee members Dr Nafisa Shah of PPP and Abdul Rashid Godil threatened to stage walkout from the meeting if government tried to approve the bill by bulldozing the opposition parties.

Committee chairman Qaiser Ahmed Sheikh tried his level best to clear the bill with numerical strength of his party members in the committee. "This is not an ideal scheme but we should pass it to generate additional revenue and to benefit the traders," Sheikh said.

Later, the committee decided to approve the bill, also known as amnesty scheme, today.

Dr Nafisa Shah asked the Federal Board of Revenue (FBR) to provide the details of previously announced tax amnesty schemes in the country. Abdul Rashid Godil said that government should take input from all political parties. He further said that amnesty scheme would promote the black economy in the country.

Mian Abdul Mannan, MNA of ruling PML-N, said that government had estimated to generate Rs50 billion from the scheme by bringing 0.5 million traders into tax net. He also asked the committee not to fix the rate of withholding tax on banking transactions in the bill.

Giving details of tax amnesty scheme announced in 1997, Chairman FBR Nisar Khan said that scheme was a failure as government could not generated the expected revenue from it.

Meanwhile, the Senate standing committee on finance in its meeting observed that the Income Tax (Amendment) Bill should not be traders-specific and should be extended to other industries. The meeting was held under the chairmanship of Senator Saleem Mandviwala here at the Parliament House on Monday.

Mandviwala noted that restricting the scheme only to traders was discrimination and showed that other sectors did not require any such special scheme to bring them in the tax net.

Chairman FBR gave detailed briefing about the bill and called it a voluntary tax compliance bill targeting the 2.2035 million traders of the country to have them in the tax net and file returns. The committee was told that out of 2.8 million traders of the country, only 625,000 traders filed tax returns.

The committee was briefed that the bill in question will enhance tax compliance, expand tax base and discourage tax evasion. The bill was termed prospective in nature. Members of the committee inquired about the incentives for traders which would encourage them to avail the scheme and were told by FBR that if a trader filed returns in 2015 and failed to pay in subsequent years, he would be disqualified from the scheme and would have to pay taxes as general taxpayers do.

Senators observed that introducing the amnesty scheme was a result of resistance faced during 0.6 percent tax scheme on banking transactions. FBR, however, observed that the tax on banking transactions was introduced by Parliament while the current bill had been negotiated beforehand with the traders.

The committee also expressed that a timeline should be mentioned for the scheme and a clause for verification of progress of scheme should be included. Senators also protested mentioning parliamentarians and culprits of crimes together in clause 16 of Part-III (General Provisions for Traders) of the bill. It was also suggested that the same be amended.

The PML-N government on January 1 announced a tax amnesty scheme to whiten the black money upto Rs50 million by paying a nominal 1 percent tax. For non-filers of income tax returns, the government has agreed to allow the whitening of assets up to Rs50 million. Traders availing themselves of the scheme will be exempted from audit for three years, as they would not be asked about sources of income. The non-filing traders in 2016 will have to declare three times more turnover than the one declared for availing of the scheme.

In case the turnover does not exceeds Rs50 million, the traders will pay 0.2 percent tax and when the turnover is more than Rs50 million but less than Rs250 million, they will pay Rs100,000 plus 0.15 percent of the excess amount. If the turnover exceeds Rs250 million, the traders will pay Rs400,000 plus 0.1 percent.

The income tax filers can also avail the amnesty scheme. Traders who file income tax returns will be allowed to revise previously filed returns in order to declare the hidden income. They are required to pay a 10 percent higher tax than the tax paid according to the original return.

In case of hidden untaxed income, the filers will declare the income by paying 1 percent income tax.

According to the Income Tax (First Amendment) Bill 2016, taxpayer should pay 25 percent higher tax than paid for tax year 2014. Similarly, turnover tax should not be less than Rs30,000 to qualify for the scheme. Moreover, they will also be required to pay 25 percent higher tax for tax years 2016, 2017 and 2018.