KARACHI: The Federal Board of Revenue (FBR) has been urged to notify procedures and rules in the forthcoming budget 2022/2023 for deducting withholding tax (WHT) on digital transactions.
Karachi Tax Bar Association (KTBA) in its proposals for budget 2022/2023 proposed the FBR to make rules regarding digitalization of economy.
READ MORE: New import income tax regime should be abolished
The tax bar said that on the eve of digitalization of economy, novel transaction/ settlement forums are emerging. These include, online marketplace, digital payment etc.
Due to lack of specific guidelines and procedures, the taxpayers are facing difficulty in applying withholding tax provisions while making payments for buying goods where the transaction involve, seller, online portal, banker etc. simultaneously.
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“The FBR should issue special procedures and rules to prescribe mode and manner of withholding of tax in case of purchase of goods or services by prescribed persons,” the tax bar recommended. Giving rationale, it said the amendment would provide clarity in law would preclude unnecessary tax disputes.
Earlier, the tax bar recommended that twelfth schedule should be abolished, and all imports should be categorized as industrial undertakings or in other respective categories as it stood prior to amendment vide Finance Act 2020.
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It is further recommended that exemption procedure under clause 72B Part IV 2nd Schedule that was revoked should be restored. Rate of tax should be reduced from 5.5 per cent to 1 per cent for all Industrial Undertakings to be adjustable tax.
Separate scheme should be introduced for service sector allowing collection of tax at import stage to be adjustable tax i.e. enabling exemption from this collection of tax.
Addressing the unnecessary hassle particularly for industrial undertaking.
Reinstatement of exemption to curtail staggering refund and bring recipe for taxpayers. To address the issue faced by the service sector.
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