Income tax exemptions may be withdrawn
SOHAIL SARFRAZ
ISLAMABAD: The government will not revise sales tax and Federal Excise Duty (FED) rates before the next federal budget, but the corporate sector income tax exemptions may be withdrawn through a Presidential Ordinance or a new Finance Amendment Bill 2021 to be moved to the Parliament before June 2021.
Sources told Business Recorder here on Wednesday that the FBR is not in the process of doing any exercise to raise sales tax rates or withdraw sales tax exemptions.
However, the FBR has finalised the list of the corporate income tax exemptions to be withdrawn from the Income Tax Ordinance 2001.
There is a likelihood that the corporate sector income tax exemptions would be withdrawn through a Presidential Ordinance or a Finance Amendment Bill 2021 during the current fiscal year.
Sources said that, “We are exploring all available options including promulgation of Presidential Ordinance or laying a bill before the Parliament for getting approval for abolishing of Corporate Income Tax exemption to generate additional revenue of Rs150 billion to Rs200 billion but nothing is final in this regard".
When asked about downward revision in the revenue collection target, sources stated that we are following the budgetary target of Rs4.9 trillion for current fiscal year and no revision has been made in the tax collection target of the FBR, top officials added.
It is learnt that the FBR has proposed to scale down the revenue collection target from Rs4,963 billion to Rs4,550 billion for 2020-21.
The second proposal is the downward revision in the tax collection target from Rs4,963 billion to Rs4,600 billion for the outgoing fiscal year.
According to sources, if the exemptions are withdrawn before the coming budget, the Ordinance will be made part of the next Finance Bill 2021-22.
Secondly, a Finance Amendment Bill can be moved in the Parliament.
The FBR has finalised corporate sector income tax exemptions up to Rs100-150 billion to be withdrawn from the Income Tax Ordinance 2001.
The FBR has reviewed the list of corporate tax exemptions under the relevant schedules of the Income Tax Ordinance 2001.
The FBR has identified tax exemption of corporate sector with an estimated cost of Rs100-150 billion that are expected to be withdrawn through Presidential Ordinance. However, if these exemptions are withdrawn in the current fiscal year, it would become effective from the next fiscal year.
It is also learnt that the Finance Bill for the next fiscal year would incorporate the amendments being made in the Income Tax Ordinance 2001.
The working done by the FBR showed that the corporate sector enjoyed income tax exemptions up to Rs150-200 billion and it is yet to be seen how many exemptions would be abolished following approval of the policy makers, they added.
