ISLAMABAD: The Federal Board of Revenue (FBR) on Monday explained that withdrawal of exemption and concession does not mean imposition of new taxes.
Clarifying to a news report, the FBR said that withdrawal of exemption and reduced rates should not be confused with imposition of new taxes.
It is very clearly and candidly informed that the present budget proposals do not contain any new item for taxation of pensions or major components of salary as initially discussed.
Omission of Clause (39) of Part I of Second Schedule to the Income Tax Ordinance, 2001 is only of technical nature. This clause provided exemption to re-imbursement of expenditure incurred by employee on behalf of the employer organization.
This type of transaction cannot form part of the salary in any circumstances. The omission has been made only because there were some interpretations of the courts that were not in accordance with the actual purpose of this clause.
The clause has accordingly been omitted to avoid multiple interpretations or confusions. The figures of revenue generation of Rs.1.82 billion reported by the Express Tribune in this regard are absolutely unwarranted and misleading.
The clause has accordingly been omitted to avoid multiple interpretations or confusions. The figures of revenue generation of Rs.1.82 billion reported by the Express Tribune in this regard are absolutely unwarranted and misleading.
However, profit on debt or markup component on provident fund has been proposed to be taxed @ 10% as a separate block of income only if such markup exceeds Rs.500, 000 in a tax year.
FBR firmly believes that this change will not result in any significant burden on taxpayers.
Slight changes on account of traveling allowance of newspapers employees, free supply of food or other perquisites etc. and salary of seafarers that was wholly exempt have been proposed for rationalization of salary tax regime rather than as revenue generation measure.
Tax rate on capital market transactions has been lowered from 15% to 12.5% in order to encourage ordinary people to invest their savings in the stock market tradable securities.
This change will result in enhanced savings and investment in an activity that will lead to industrial expansion and economic growth.
Needless to highlight, an enhanced confidence in stock market ultimately translates into raising funds/money by initial public offerings (IPOs) by existing companies or new companies joining the field.
The incentive has been offered for promoting sustainable and inclusive economic growth.
Ministry of Finance and FBR are always open to positive critique for making changes if any required in the proposals, however, take a strong exception to undue, unwarranted and unjustified criticism.
