KARACHI: Overseas Investors Chamber of Commerce and Industry (OICCI) has suggested that exemption on agriculture income should be withdrawn and bring all income into tax net.
The OICCI in its proposals for budget 2020/2021, recommended withdrawal of exemption of agriculture income and also proposed amending Section 41 of Income Tax Ordinance, 2001.
The OICCI said that the GDP includes some sectors which are exempt from income tax. The biggest exempted sector is agriculture which does not make any contribution to the national exchequer, despite the fact that over 65 percent of Pakistan’s population is directly or indirectly linked with the agricultural sector.
The original rationale of keeping agriculture out of tax net was to facilitate the small agriculturists.
However due to non-implementation of land reforms the benefit of the tax exemption is being availed by big landowners earning huge incomes.
Unscrupulous elements also transfer their income and wealth to businesses fronting as agriculture sector.
The OICCI recommended:
i. Exemption given to agriculture income should be withdrawn and agriculturists should file income tax returns and wealth statements.
ii. Suitable provisions should be incorporated in Income Tax Ordinance 2001 to enable tax authorities to implement the requirement of filing of income tax returns and wealth statements, effectively.
iii. All incomes should be taxed and as a general rule exemptions be given only for attracting FDI and for under privileged and poor sections of society or, in exceptional circumstances, as motivation to encourage the registration of individuals and all legal entities.
