09/06/2019
Proposed tax changes in coming budget
a) unregistered industrial / commercial entities (not having STRN) having electricity / gas bill amount in excess of Rs. 20,000 per month, extra sales tax should be increased from 5% to 20%
b) Residential consumers be made liable to provide NTN in case electricity bill amount exceeds Rs.1.2 million per year or levy advance income tax withholding of 20%.
c) All exemptions (like exemption on agricultural income) under the Income Tax Law should only be made available to filers so that exempt income is also reported and wealth is reconciled with income reported in the return.
d) Withholding tax on International business class tickets under section 236L is same Rs. 16,000 for filer and non-filer, it should be increased to Rs. 50,000 for non-filers.
e) Withholding income tax on interest income u/s 151 is 10% for filer and 17.5% for non-filer. Rate should be increased to 30% for non-filers.
f) Annual private motor vehicle tax u/s 234 for non-filers is Rs. 30,000 for 2000 cc and above. Rate for non-filers should be increased to Rs. 200,000 for 2000 cc and above
g) Rate of income tax on Filer as well as Non-Filer Commercial / industrial connections of electricity is 12% and 5% respectively. Rate of tax for Non Filer Commercial / industrial connections be increased to 25%
h) At present, 12% WHT is being collected from owners of Marriage halls on their electricity bills, which does not represent actual tax on their income. Moreover, the same is somehow minimized through use of generators. In order to avoid this, Capacity tax should be imposed on marriage halls on the basis of square feet coverage area
i) List of registered Marriage halls paying capacity tax on sq. ft. basis should be on internet and accessible to all so that it can easily be identified who is not on the list thereby forcing them to get themselves register and pay tax.
j) Tax on capital gain on disposal of shares of Listed Company is 15% for Filers and 20% for Non-Filers. Rate of tax for Non-Filers be increased to 30%.
k) List of top 100 restaurants registered in Federal / Provincial sales tax with the amount of tax paid, should be on internet accessible to all so that famous busy restaurants who are not on this list or on bottom of the list are induced not to embarrass themselves by declaring low sales.
l) Lottery system be introduced for invoice collected by customers of restaurants and uploaded on designated website. Moreover, invoices submitted by customers should be cross checked with invoices reported by restaurants in their monthly sales tax return.
m) Advance tax @ 1% and 2% is collected from filer and non-filers respectively on sale or immovable property. For sale of land above 250 sq. yds, rate of advance tax should be increased to 10%
n) In addition to above referred tax, the real estate constructors should pay additional w/h tax when they get the constructed property registered in the name of buyers of their constructed property. This would be inline with withholding taxes imposed on industries on transactions executed by them.
o) Purchase of land (above specified limit) is only allowed by filers, however, holding of land and its sale by non-filers is still allowed. Holding of land by non-filers should be made more expensive by asking authorities collecting property tax (cantonment boards / societies / registrar) to collect adjustable advance income tax, from non-Filers, on behalf of the Federal Government as follows:
i. Rs. 500,000 per year for 800 yards or more but less than 1800 yards
ii. Rs. 1 million per year for 1800 yards and above.
iii. So that such property comes for sale.
p) Currently, Advance income tax on international travel is being collected as follows, which should be increase as follows:
• First / Executive class – Rs. 16,000 be increased to Rs. 35,000 for Non-Filers
• Other excluding Economy - Rs. 12,000 be increased to Rs. 20,000 for Non-Filers
• Economy – No tax is being collected on economy class tickets. To allow data mining, marginal w/h tax (say Rs. 200 or 500) be imposed on Non-Filers to gather data of frequent travelers.
q) mobile phone connection should only be available to Filers incase annual bill amount exceeds Rs. 75,000 per annum per CNIC.
