ISLAMABAD, May 16: The government is considering two proposals to reduce the rate of withholding tax on imports and supplies in the budget of 2005-06. An official told Dawn on Monday that the task force constituted by the government for encouraging corporatization in the country has proposed to the government to slash down the rate of withholding tax on imports from six per cent to three per cent for both commercial importers and local manufacturers.

It was also under consideration to lower the rate of withholding tax from 3.5 per cent to 1.5 per cent on supplies to give relief particularly to the corporate sector, added the official. The task force also proposed to the government to fix income tax rate around 20 per cent for small companies having a paid-up capital of Rs20 million and turnover in the range of Rs200 million.

The task force also proposed to the government to slash down the income tax rate from 35 to 30 per cent for the public companies and for private companies to 35 per cent from 39 per cent. However, the rate of income tax for the banking company would remain the same, the task force recommended.