Concerns from both ends over implementation of a new income-tax law prompt government's revenue authority to make frequent changes to its incongruous provisions, like taxing private provident fund at corporate-tax rate.
In another instance of what is now deemed as a discrepancy land-and flat-registration tax has been jacked up cent per cent (by 100 per cent) that, in domino effect, pushes up land and house prices to put both realtors and home buyers in a flat spin.
The new income-tax act came into effect on July 1, 2023 after it had got through parliament during the budget session for fiscal year 2023-24. And four of its provisions have already been amended through issuing Statutory Regulatory Order (SRO) "in public interest".
The changes include those on source tax on deposits, savings certificates, exporters' cash incentives, and turnover taxes on beverages.
A move is underway to lower the tax rates for land and flat registration, hiked by 100 per cent.
Officials have said the changes have been done following concerns over significant rise in payable taxes on both corporate and individual taxpayers as well as complexities in enforcement by taxmen.
A senior tax official says taxmen have pointed out several implementation challenges of the new law for some new provisions which were not in the previous law-the Income Tax Ordinance1984.
"At a recent programme arranged by BCS Tax Association top taxmen raised concerns over a number of provisions in the law," he says.
In some areas, the new law has cut discretionary power of taxmen which might hinder enforcement of the act, he adds.
He wouldn't explain in detail.
Taxmen try to water down the problem with the new law, saying that transition to a new direct-tax regime usually confronts such complexities all over the world, too.
Neighboring India had to bring hundreds of amendments to its new direct- tax act. Same happened to the VAT and Supplementary Duty Act-2019 in Bangladesh that also went through numerous changes following requests from businesses as well as field-level VAT officials.
A number of top taxmen indicated some more changes to the newly incorporated provisions would be needed to make the act taxpayer- friendly.
They point out that the new tax act has incorporated some regressive measures for the current fiscal year which might be difficult for taxpayers to go by and not aligned with the existing socioeconomic perspective.
There are some discriminatory tax measures too where rate of tax on provident fund for private sector has been fixed alike corporate tax that is a tall 27.5 per cent, in a pushup from earlier 10 per cent, while government entities have been relieved of the tax burden.
And date of submission of tax returns by all funds, including provident fund, has been set similar to individual taxpayers (November 30) while all compliance requirements have been imposed on funds similar to that of corporate taxpayers, tax experts mention.
Missing deadline for submission of tax returns would incur enormous pecuniary penalty for the taxpayers this year under the new law.
The tax official thinks the government should consider keeping a grace period for the individual taxpayers, at least for the first year of implementation of the new act, to help them adapt to the changes.
Both individual taxpayers, funds, educational institutions having English- medium curriculum have to submit tax returns by November 30, 2023 to avail tax benefit on income and expenditure.
There would be a 4.0-percent penalty or simple interest on the payable taxes, too. Tax would be imposed on entire income of a taxpayer in case of failure in submission of tax returns in time.
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