KARACHI: The CPE Committee of the Karachi Tax Bar Association organized a post budget seminar to discuss & deliberate on the possible consequences of the Federal Budget 2014-15.
The revenue collection target of Rs2.81 trillion assigned to the Federal Board of Revenue (FBR) for the fiscal year 2014-15 is difficult but achievable, considering projected economic growth, a senior tax official said
“The rise in inflation and projected development expenditure will help the revenue body achieve the collection target in the next fiscal year,” Rehmatullah Khan Wazir, chief commissioner of the Large Taxpayers Unit (LTU) Karachi said.
The revenue for the outgoing fiscal year will be near to revised collection target of Rs2,275 billion, he said.
Several measures have been taken in the budget for broadening the tax base. “The concept of filer and non-filer has been introduced to broaden the tax base and given incentives to the compliant taxpayers,” he said.
Wazir said that in the past several attempts were made to broaden the tax base, including conducting surveys, exemption from audit and amnesty schemes. “But all such exercises could not yield desired results,” he said.
The applicability of active taxpayers-related provisions will be difficult. However, the same should be adopted on the filers of last tax year, he said.
The LTU Karachi chief commissioner said that changes regarding retailers will force them for mandatory registration.
Talking about the withholding tax on immovable property, Wazir said, the federal government has no power over amending the collector rate.
“At present, the collector rates of provinces are not at par with the open market rate,” he said, and suggested the provinces to revisit the existing rates.
Commenting on the single-digit sales tax, he said, a commission has been constituted, which will give recommendations in the next three to four months.
He; however, suggested that the provinces should bring down their sales tax on services to a single-digit because in a scenario when the federal government brings down the sales tax to a single-digit, there would be no input adjustment and refund. “This may create problems for the taxpayers,” he said.
Masoud Naqvi, country senior partner of KPMG Taseer Hadi and Co, while deliberating on the impact of budget on the economy, said that the latest budget is the continuation of the last year’s programme of the government.
He lauded the government for achievements made in the outgoing fiscal year, especially attaining the economic growth of 4.1 percent from 3.7 percent, as well as an increment in the per capita income to $1,386 from $1,339.
He said that curtailing budget deficit at 5.8 percent from the previous year’s 8.2 percent was a big achievement. However, he said that it would depend on the provincial budgets where the federal government has estimated Rs220 billion.
Naqvi highlighted certain challenges to be faced by the government in the days to come, including poor law and order situation and terrorism where $102 billion losses had already incurred to the economy during 2001 to 2014.
He said that the failure of provinces to raise adequate revenues is another challenge for the present government.
Abdul Qadir Memon, former president of the Pakistan Tax Bar Association, highlighted the changes brought in the direct taxes through the Finance Bill, 2014.
He said that the budget is aimed at creating clear difference between taxpayer and non-taxpayer. The budget also focused on broadening the tax base through introduction of new withholding tax regime.
Memon said that through these changes the share of direct taxes would increase from 36.5 percent to 37.5 percent. Besides, Rs100 billion exemptions have been withdrawn and the budget incentivised export and textile sectors, he added.
Adnan Mufti, FCA at Shekha and Mufti Chartered Accountants, explained the changes in indirect taxes.
He questioned the claim of the business-friendly budget. “Reality will unfold slowly and gradually,” he said, adding that there is an unclear tax policy of the government.
Except for half-backed measures in case of retailers, no tangible efforts have been made to enforce tax laws to non-complaint sectors, he said.
“The government, instead of improving its expenditure, is placing strong emphasis on tax burdening measures,” he added. Syed Wasimuddin Hashmi, president of KTBA, welcomed the speakers for deliberating on the key issues pertaining to the budget. He also appreciated the guests for highlighting anomalies in the Finance Bill 2014.
KARACHI: Lower than expected Consumer Price Index (CPI) reading for June 2015 coupled with delay in ...