BUDGET PROPOSALS FOR THE YEAR 2003-04

BUDGET PROPOSALS FOR THE YEAR 2003-04 <!--[if gte mso 10]> BUDGET PROPOSALS FOR THE YEAR 2003-04 By Shabbir Fakhruddin, Karachi I am pleased to submit budget proposals for the year 2003-2004 as under. The fact remains unchanged despite the good performance in past three years, the miseries persist among masses, adding at present, the country is facing "problems of unemployment, poverty and poor standards of educations as well as health facilities. Income Tax: (1) To generate more revenue, small traders and cottage industry should be taxed at the rate of 0.75 per cent on total annual sales. (2) It is suggested, the Government to exempt small taxpayers including shopkeepers and vendors whose contribution to the overall economy is not immense and who are mostly uneducated, from maintenance of prescribed books of accounts. Similarly medium class of taxpayers the bare minimum accounts required to be maintained. (3) Massive awareness campaign be initiated instead of publishing cumbersome brochures, one page leaflets for this purpose may be issued. (4) Tax law should be so simplified, classified and compiled that any particular class of taxpayer is able to find most of the basic provisions relating to his class at one place. The major weakness in the tax structure includes narrow and punctured tax base because of wide ranging exemptions and concessions resulting rampant tax evasion. (5) The present tax rates are too high and needed to be reduce to reasonable level to encourage existing taxpayer to declare true and correct income besides attracting new assessee. (6) The highest tax rate for salaried persons should be reduced immediately and brought down to the level of around 20 to 25 per cent. (7) The tax structure should be so modified that the salary increases should not reduce the take-home salary. (8) Facility of automatic stay of payment of tax should be given to the appellants before the CIT(A) and ITAT to avoid undue hardships to the taxpayers. (9) Mandatory payment of 15 per cent of the disputed tax prior to filing of appeal is against the very right of seeking justice provided to every citizen of Pakistan through the Constitution of the Islamic Republic of Pakistan. The Courts have held that any bar against right of appeal is illegal. The provisions relating to payment of 15 per cent of disputed tax demand before filing of first appeal is harsh and unjustified. When a tax demand is in dispute, what rationale one could give for its recovery before the decision in appeal? (10) There should be a clear-cut directive that the appellate fora cannot set aside the same issue more than once, so that the entire appeal process can be completed within the time frame. (11) A time frame should be introduced, whereby the ITAT is required to give its decision within three months of the filing of an appeal. (12) Any amount received as loan, advance or gift in cash by an assessee is deemed to be the income of the assessee under section 39(3). This provision is creating harassment among the taxpayers as the tax authorities hit the transaction without going into the nature. Appropriate provisions for removing this hardship regarding advance received and non-applicability in case of spouse and blood relations if the source of funds is explained. (13) Presumptive tax approach should only be applied on those persons whose incomes are likely to be difficult to determine accurately. It is suggested that all the categories of taxpayers like petroleum dealers etc., whose incomes are difficult to determine accurately ,be again brought into presumptive tax regime. (14) To attract foreign investment in industrial undertaking, the tax rebate up to 25 per cent may be provided in the first 5 years of commercial production to all those industrial undertaking, which are set up through foreign remittances brought into Pakistan through proper banking channel. (15) The law pertaining to additional payment to the assessee at the rate of 15 per cent per annum for delayed refunds under section 171 of the Income Tax Ordinance, 2001 should be expeditiously exercised. (16) The companies should be allowed to pay advance tax, based on their own estimate of the year's profit. (17) Section 122 of the Income Tax Ordinance, 2001 needs to be reviewed. (18) Still many items are subject to double taxation, i.e. both GST and CED, and double taxation system should be done away with immediately. Sales Tax: (1) It is necessary to lower the tax rate and the maximum rate of GST should be fixed as 10 per cent. (2) It is suggested that there should be a time limit for the settlement of all sales tax cases. Maximum allowable time should be six months from filing of case. (3) It is suggested that determined refunds must be paid off in cash or allowed to be adjusted against output sales tax payments the month after the order has been issued. (4) It is suggested that necessary provision be made available in the Sales Tax law to rectify the mistake appeared in the Sales Tax Return within a month after filing the return. (5) The cash limit of Rs.50,000 is very low which must be increased to Rs.100,000 (6) Rules for registration need to be recast. To broaden the tax net, it is essential that every body desiring to be registered should be registered without questions. (7) It is suggested that the law should provide a distinction between an unregistered person and the one not required to be registered. Those who are not required to register may be required to pay further tax at a lower rate, say @ 1%. (8) At present, there is no time limit for the sanction and payment of a refund claim filed under section 66 of the Act. It is suggested that law should be amended to force claims filed under-section 66 in specific time. Beyond the specified time limit, the registered persons should be entitle to damages claim, say not exceeding 10% p.a. and sanctioned as such. Now, time has come that reforms should be introduced in the C.B.R. to eliminate corruption. Tax system should be made easy and understandable. The tax law should therefore, be just, fair and honourable piece of legislation that makes a taxpayer feel honourable, proud and inclined fearlessly and voluntarily to make his full contribution, otherwise he obviously will not do it when he is looked upon as a suspect straightaway. Cottage Industry. (1) It is suggested that in order to promote the cottage industry, a net of cottage industry should be spread all over the country and they should be provided necessary facilities and incentives. This would not only provide employment to hundreds of thousands of people, but would also be helpful for big industries. (2) Cottage industry should be charged relatively lesser rate of electricity and gas as compared to other industries. (3) The Government should establish an industrial estate only for cottage industry in the suburban areas of cities and plots be allotted on very concessional rates. (4) To promote new investment in cottage industry, it was suggested that the source of investment up to Rs.3.00 million should not be asked from the industries. (5) It is also suggested that the industries having maximum labour strength of 25 persons should be considered as cottage industry. At the end, it is suggested that to increase the industrial activities in the country, it is necessary to provide to is infrastructural facilities to all new and existing industrial estates, saying the facilities of roads, water, sewerage, power and gas should be provided within 30 days to every industrial unit. It is, therefore, requested that above budget proposals may please be considered for the forthcoming Federal budget for the year 2003-2004.