close
Advertisement
Can't connect right now! retry

add The News to homescreen

tap to bring up your browser menu and select 'Add to homescreen' to pin the The News web app

Got it!

add The News to homescreen

tap to bring up your browser menu and select 'Add to homescreen' to pin the The News web app

Got it!
 
January 3, 2016

New tax amnesty scheme only for traders

Top Story

 
January 3, 2016

ISLAMABAD: The government has barred members of Senate, National Assembly and provincial assemblies from availing voluntary tax compliance scheme (VTCS), unveiled by Prime Minister Nawaz Sharif on Friday.

This proposed scheme excluded professional services, manufacturers and other sectors as well because it aimed at only tapping traders for luring them into tax net by declaring their genuine capital.

When contacted FBR’s spokesman Dr Iqbal said the traders had committed with the finance minister to bring one million non-filers into tax net. He said the revenue collection out of this scheme depends on how many people avail this scheme.

To another query, he said this scheme was aimed at bringing traders into tax net, so other sectors were excluded from it.

The excluded professional services are chartered accountants, architects, dentists, doctors, engineers, interior decorators and lawyers from the ambit of the proposed tax amnesty scheme for legalising hidden income more than permissible limit of Rs50 million.

The persons convicted under Control of Narcotics Substances Act 1997, Anti Terrorism Act 1997 and Anti-Money Laundering Act 2010 shall not be eligible to qualify for this proposed scheme. The proposed VTCS allowed both filers and non-filers to whiten their black money by paying one percent tax.

The chartered accountancy firm, Naveed Zafar Ashfaq Jaffery & Co, has supported the new scheme and termed it as an opportunity for filers and non-filer traders to regularize their tax affairs.

However, they pointed out that the VTCS may be exploited by individuals or AOPs by distributing their working capital among several associated persons to whiten their maximum wealth. For example an individual having working capital of Rs500 million may file 10 different returns under names of related persons (sons, daughters, spouse, etc.) and avail the scheme.

Powers of commissioner under section 122: It has been provided that the return filed under the scheme may be amended by the commissioner subject to possession of definite information. The income disclosed by the trader has also been made subject to amendment instead of limiting the powers to undisclosed wealth. This provision will render the VTCS of no benefit as the powers of commissioner under this provision will be a hanging sword over traders availing the VTCS.

Imputable Income: The provisions relating to Imputable Income under Part I need further clarification as to the course of action in case the imputable income falls short as compared to working capital declared.

Time Limit for Compliance: The time limit for compliance under the two schemes introduced earlier in 2013 and in 2008 was extended multiple times. The scheme introduced in March 2013 was time bound for three months, whereas, scheme introduced in July 2008 was valid initially for 4 months (till October 31, 2008) and was further extended for 2 months (until December 31, 2008). As the time limit for compliance under the VTCS has been extended up to 31st January, 2016 (which will probably extend further keeping in view the history of granting extensions), there is a chance that taxpayers under normal tax structure will also delay the filing of their returns to further defer their tax payments. The compliance date of the scheme is, therefore, required to be made exclusive for the traders eligible under this scheme only, they concluded.