Karachi Tax Bar Association Proposes Amendments to Ease Tax Challan Issuance

Karachi Tax Bar Association Proposes Amendments to Ease Tax Challan Issuance

Karachi Tax Bar Association (KTBA) has proposed amendments to ease in tax challane issuance while raising concerns over the difficulties faced by taxpayers in obtaining copies of challans from withholding agents.

In their proposals for the 2023-2024 budget KTBA highlighted the challenges taxpayers encounter, especially when the tax withheld is paid through book entry or a single consolidated challan without specific details of the individuals from whom the tax has been collected.

Withholding agents, including electricity distribution companies, telecommunication companies, airlines, and various government and local bodies, do not provide copies of challans to taxpayers. To address this issue, KTBA has put forward a series of amendments for consideration:

1. Definition of ‘any other equivalent document’: KTBA suggests that the term ‘any other equivalent document’ used in section 164(1) should be clearly defined to encompass various documents such as electricity bills, telephone bills, airline tickets, bank statements, and similar records that can serve as evidence of tax payment.

2. Inclusion of ‘any other equivalent document’ in section 164(2): KTBA proposes adding the words ‘any other equivalent document’ as acceptable evidence of tax payment to be furnished along with the tax return.

3. Proviso for tax payment evidence: KTBA recommends adding a proviso under section 164(2) that would allow for the acceptance of a certificate of collection or deduction of tax as evidence of tax payment. This provision would apply when the withholding agent fails to separately identify the person from whom tax has been collected or deducted in the respective tax deposit challan (CPR), or when the tax is deposited through internal government adjustments.

In addition to these amendments, KTBA suggests introducing a new clause in Part IV of the Second Schedule. This clause specifies that section 164 shall not apply to certain withholding agents, including electricity distribution companies, telecommunication companies, airlines, banks, financial institutions, local bodies, and government bodies. In such cases, a certificate issued by these entities, mentioning the amount of tax collected, would be considered sufficient evidence of tax payment.

By proposing these amendments, KTBA aims to address the challenges faced by taxpayers in obtaining copies of challans from withholding agents. They believe that expanding the range of acceptable documents and providing alternative provisions for tax payment proof will simplify the process and enhance compliance for taxpayers. These proposals will be taken into consideration during the formulation of the 2023-2024 budget.