August 12, 2013 Brief Tax News: 1. Five zero-rated sectors: reduced rate facility of WHT at one percent misinterpreted The facility of reduced rate of withholding tax at one percent provided by government to five zero-rated sectors has been misinterpreted by some field officers of Federal Board of Revenue (FBR), who have started recovery proceedings by misreading the contents of SRO.333(I)/2011. Experts told Business Recorder here on Sunday that earlier through SRO 333(I)/2011, FBR has provided relief to business community in shape of introducing concessional rate of withholding tax on supplies and services provided to the taxpayers dealing in five zero rated sectors and standard rate of withholding tax at 3.5 percent and 6 percent respectively against supplies and services has been reduced into single rate of 1 per cent. Contrary to the factual position and without considering/examining the real intention of the government to facilitate taxpayers engaged with the business of textile and articles thereof, carpets, leather and articles thereof including artificial leather footwear, surgical goods and sports goods, recovery proceedings have been initiated by some filed formations simply be misinterpreting the law. The adamant attitude of field formations will not only create serious problems for the business community but also creating negative image of FBR among the taxpayers. Tax lawyer further added no doubt FBR mainly relies on withholding tax for collection of taxes and share of withholding taxes in the overall budget target is quite significant. The field officers are not directly involved in direct tax collection because around 90 percent of the budget target of Regional Tax Offices has been met through withholding taxes. If policymakers compare the contribution of the field officers in the budgetary targets from other than withholding tax sources, with the operating expenditures incurred on the tax departments including salaries/benefits, it may lead to an alarming conclusion on their cost benefit ratios. 2. Income tax returns: FBR will not accept without filing wealth statements The Federal Board of Revenue (FBR) will not process and accept the income tax returns of all public/private sector employees, including politicians members of National Assembly, Senate, Federal/Provincial cabinets employees, without filing of wealth statements for the period ending June 30, 2013 ie, period relevant to Tax Year 2013. Sources told Business Recorder that all employees drawing annual salary of Rs 500,000/- are legally obliged to submit their annual income tax return along with wealth statements and wealth reconciliation statement (explanation of sources to generate wealth) electronically for the Tax Year 2013 under the provisions of Income Tax Ordinance, 2001. Sources further stated that electronic filing of income tax returns and wealth statement by salaried persons through eFBR web portal devised by PRAL has been made mandatory through Finance Act, 2009. The proviso to sub section (1) of section 115 has been substituted to provide that where salary income for the tax year is Rs 500,000 or more, the taxpayer shall file return electronically on the prescribed form as well as wealth statement as required u/s 116 of the Income Tax Ordinance 2001.
Posted on: Mon, 12 Aug 2013 15:59:44 +0000
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