KARACHI, Aug 19: Tax experts have suggested that the CBR should be asked to amend the Income Tax Law to reduce the high impact of tax on a salary marginally exceeding the limit of Rs0.6 million.
“It is very important to note that in case a salary of a person marginally exceeds the limit of Rs0.6 million the tax impact goes up to Rs1,02,000, therefore, the tax bar should approach the CBR to amend the law,” observed tax consultant Ali A. Rahim.
Speaking at a seminar on “Withholding Tax and Taxation of Salaries” organized by the Income Tax Bar Association, Karachi (ITBAK) here on Monday, he said the impact of tax should be kept at 50 per cent of the amount in excess of the threshold of Rs0.6 million.
Similarly, Ali Rahim also took into consideration the changes had been brought about by the Finance Ordinance, 2002 and the enactment of the Income Tax Rules 2002.
However, he was critical that CBR issued a circular 12, on August 9, 2002, against the draft amendments of August 8, 2002, assuming that it have attained a finality, whereas under the rules a 15 days time should have been given for soliciting views and suggestions.
Though under section 13 of Finance Ordinance 2002, all perquisites have been made part of salary but the Income Tax Rules 2002 enacted on July 1, 2002, and amended on August 8, 2002 has defined “Basic Salary” and “Salary” in Rule 4 as separated taxable and non-taxable perquisites, he said.
Therefore, he said under the draft rules circulated on August 8, 2002, the concept which was prevalent in the Income Tax Rules of 1982, the calculation has to be done on the basis of Rule 5 to 8 if taxable figure exceeds the threshold of Rs0.6 million and perquisites are to be offered for tax as per Rule 9.
He was appreciative that the CBR through Circular 13 K(B) has made tax on tax with prospective effect which gives exemption for one year.
Another speaker Haider Ali Patel dealt at length on provisions of withholding tax under the Income Tax Ordinance, 2001.
The president of Income Tax Bar Association, Karachi (ITBAK) Abdul Qadir Memon in his address of welcome said that the tax bar is endeavouring for the removal of irritants in the Income Tax Ordinance 2001, and Income Tax Rules 2002.
While appreciating the services of the president of Institute of Chartered Accountants of Pakistan (ICAP) Khaliq- ur-Rehman, who was chief guest on the occasion, Abdul Qadir suggested to form a joint working committee of ITBAK and ICAP.
