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Friday March 29, 2024

Token tax lacuna

According to the latest government rules, payment of the yearly token tax on vehicles has been increased for non-tax filers. This is a good move and may increase the number of tax filers and bring some more non-filers into the tax net. However, for big tax defaulters paying a few

By our correspondents
July 27, 2015
According to the latest government rules, payment of the yearly token tax on vehicles has been increased for non-tax filers. This is a good move and may increase the number of tax filers and bring some more non-filers into the tax net. However, for big tax defaulters paying a few thousand extra rupees is not a big dent on the amount they evade from tax payment.
That said there is a big lacuna in the new regulation. While the salaried class is exempted from providing a copy of the income tax payment certificate (since tax is deducted at source) there is no such provision for retired civil servants whose pension is exempted from tax. Most of them live on their pensions and some savings in the National Savings Scheme where either their profit is exempted from tax or tax is deducted by NSS from their monthly profit. To make pensioners pay extra token tax as non-filers is therefore not fair and they should also be exempted from the provision of the income tax payment certificate. In any case, the FBR is now totally computerised and has a complete records of pensioners who paid tax on salaries while they were in service. Hopefully, the FBR and the excise department will look into this lacuna and remove the anomaly.
Zaheer Ahmed
Islamabad