The federal government has been urged to exempt withholding tax on transactions made for futures contracts, end disparity in tax rates for corporate and non-corporate businesses, and remove sunset clauses on capital gain tax (CGT) exemptions for real estate sector in the upcoming budget. In its budget proposals submitted to the Federal Board of Revenue (FBR), the Pakistan Stock Exchange (PSX) highlighted the aforementioned issues, saying currently a buyer of a commodity withholds tax (4 percent-9 percent) from the seller before making payment with the exception of growers. This tax adds cost and puts the investors at a disadvantageous position when dealing in actual commodity exchange at PMEX in futures contracts/e-WHR5 as grain markets are not documented and as such this tax is actually not being paid. The stock exchange proposed to exempt commodity futures contracts and EWRs from the application of section 153 of the Income Tax Ordinance, 2001 like these are exempted from GST under SRO 445(1)12004 June 14, 2004. Giving rationale to the proposal, the PSX said that development of regulated and organized commodity markets will greatly benefit the agriculture sector. Revenue impact will be neutral to positive due to adjustability of withholding tax while documentation leading towards more income tax from traders and related parties. Likewise, the PSX said that inequality in tax rates for corporate and non-corporate businesses has discouraged corporatisation in the country. The stock exchange pointed out that corporate business profits are taxed twice: once at company level at 29 percent and on dividend distribution at 15 percent. As compared to 44 percent of total tax in case of companies, unincorporated businesses are being taxed from 0 percent to 35 percent in slabs. This inequity in taxation is discouraging corporatisation and documentation as unincorporated businesses are subject to substantially lower taxes. Therefore, the PSX recommended that inequality of taxation of businesses should gradually be removed by reducing corporate tax rate/increasing tax rates for AoPs [First Schedule Part 1, Division I, II, hA & Ill]. It said that equality of tax regime will promote corporatization culture leading towards documentation and will therefore generate more tax revenue. Adding clarity with respect to the status of LLP will encourage more businesses particularly in the services sector to opt for this perpetual business structure. It will also help in increasing tax revenue from these segments.