PTBA urges benefits for taxpayers opting out of PTR

KARACHI: Pakistan Tax Bar Association (PTBA) has urged the tax authorities to give benefits to persons opting out of presumptive tax regime (PTR).

In its proposals for budget 2019/2020, the apex tax bar said that through Finance Act, 2012 positive steps were taken for opting out of presumptive tax regime in respect of sale of goods, import and export of goods, subject to certain conditions, which were highly appreciated.

The Finance Act, 2014, however reversed the amendments and in place thereof inserted new clauses (56B), (56C), (56D), (56E), (56F) and (56G); whereby certain persons may opt out of the final tax regime by filing the return of income along with accounts and documents as may be prescribed subject to the condition that their minimum tax liability under normal tax regime shall not be less than the tax already collected/deducted at the applicable rates of the respective Sections.

The Finance Act, 2014 also inserted certain new clauses on similar lines. Under these clauses, the option to opt out of the final tax regime was provided to a person who provides services of stitching, dying, printing, embroidery, washing, sizing and weaving to exporters or an export house.

Furthermore, petrol pump operators and persons earning commission or brokerage are also provided with such an option.

Under the new clauses introduced by the Finance Act, 2014, the tax liability of persons is higher than the tax liability they were required to pay under the initiative introduced vide the Finance Act, 2012.

“Furthermore, it should be noted that as per the current position of the law, the taxpayers would, in practice, not obtain any financial benefit by opting out of the presumptive regime and would instead be required to face the additional burdens and risks of tax audits,” the tax bar said.
The PTBA said that the options introduced by the Finance Act, 2012 should be reintroduced or alternatively, as a first step the corporate sector is given option to opt out from presumptive taxation.

The proposed modification may help starting the journey to tax real income instead of taxation under the PTR reduces the additional burdens imposed on the corporate sector.

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