Daily Times

Tax practitioners have suggested the government to abolish alternative corporate tax (ACT) and reintroduce income tax credit on registered sales in the upcoming budget for the fiscal year 2021-22 to cut cost of doing business and increase the tax base. The Karachi Tax Bar Association (KTBA) in its recommendations for budget 2021-22 submitted to the Federal Board of Revenue (FBR) said that as per section 113C of the Income Tax Ordinance, 2001, tax payable by company subject to tax under Division-II Part-I of 1st Schedule or minimum tax shall be higher of corporate tax or ACT. The KTBA said that it is increasing the cost of doing business and regressive taxation. Therefore, the KTBA proposed that ACT Should be abolished. It said that there is already a minimum tax regime which imposes tax on the gross turnover under section 113, alongside minimum tax regime for supplies, services, under various sections of the ordinance and hence ACT is only increasing the complexity of the computations.