Lahore – In a major move towards policy advocacy, the Lahore Chamber of Commerce & Industry on Thursday took up the issue of withholding tax on bank transactions with Federal Ministers, Parliamentarians and key government departments.

The LCCI President Sheikh Muhammad Arshad through a letter to MNA Pervez Malik, Chairman FBR Tariq Bajwa, Special Assistant to Prime Minister on Revenue Haroon Akhtar Khan, Federal Minister for Commerce Khurram Dastgir Khan, Federal Finance Minister Ishaq Dar, Federal Minister for Kashmir Affairs & Gilgit Baltistan Muhammad Barjees Tahir and Senator Raja Muhammad Zafar-ul-Haq, informed them of business community challenges particularly with reference to withholding tax on bank transactions.

As per LCCI proposals, LCCI President Sheikh Muhammad Arshad said that withholding tax on banking transactions has created a tense situation which needs to be tackled through meaningful dialogue between the government and the business community.

He suggested that the filers should not be charged withholding tax at all in any case and non-filers should be required to pay withholding tax as final liability at the rate of 0.20% on cash withdrawal of more than 200,000/= per day only.

Sheikh Muhammad Arshad said that currently, the income of non-salaried individuals up to Rs.400,000/= is exempt from tax. He proposed that the threshold of income of non-salaried individuals should be enhanced to Rs.600,000 from 400,000/=.

Regarding Wealth Statement under section 116, he said that its filing should be made mandatory for all individual taxpayers where declared income is Rs.20,00,000 or more.

The LCCI President said that currently rate of Corporate Tax for Public/Private companies is 33% while this rate in countries like Afghanistan, Bangladesh, Bhutan, India,  Sri Lanka, Turkey and China is 20 percent, 27.5 percent, 30 percent, 30 percent, 28 percent, 20 percent and 25 percent respectively. He said that keeping in view the above Corporate Tax rate in Pakistan should be reduced to at least 25%.

“Tax Regularization Scheme for business community should be introduced for existing and new (both) taxpayers wherein Rs. 10,000 should be imposed for the businessmen declaring personal / businessassets (liquid / fixed) to the tune of Rs. 50 Million and Rs. 25,000 should be charged from the business people declaring assets of Rs. 100 Million or more. LCCI is of the view that this would help broaden the tax net only if government would not ask about, probe or scrutinize the source of income and will not conduct any audit of existing / new taxpayers for the last SIX years, if the taxpayers declare their income 20% more than the last year, he should be exempted from audit for the upcoming THREE years and government would accept the declarations as they are filed by the taxpayers”, Sheikh Muhammad Arshad suggested.

He said that the traders who fall under SRO 608 should not be required to act as withholding agents irrespective of their amount of sales.

The LCCI President said that government in general and Federal Board of Revenue in particular should realize the fact that revenue target should only be met if business community is facilitated.

He said that tax reforms are need of the hour as it would not only give breathing space to the crisis-hit business doing people but would also strengthen the relations between the government the private sector.