KARACHI: The government in the budget 2013-14 has proposed major amendments in Income Tax Ordinance 2001, which may be difficult for the FBR field formations to implement.
According to tax experts, the budget 2013-14 has proposed around 20 major amendments in the income tax laws which have further complicated the existing tax laws.
The experts feel that complexities may have far-reaching implications on revenue collection.
The Income Support Levy Act 2013, which has been introduced for the first time through Finance Act 2013, would also be enforced and monitored by the Inland Revenue Service (IRS).
Under this law, a levy of 0.5 per cent will be charged on all moveable assets, such as vehicles, prize bonds, cash-in-hand or bank, shares of public and private limited companies, etc.
The tax consultants are apprehensive about capacity and ability of field formations of the FBR to rightly monitor the collection after the enforcement of the law.
Similarly, by making it mandatory upon every taxpayer, irrespective of quantum of income -- be an individual, business establishment or a salaried person -- to file wealth statement would be difficult to be monitor.
The rate of turnover tax has been increased from 0.5pc to 1pc for companies, association of persons (AoPs), including individuals having turnover above Rs50 million.
Furthermore, every person, who is registered under Sales Tax Act 1990, has been made withholding agent.
The withholding tax rate has been increased from 5pc to 5.5pc in case of taxpayers other than individual undertakings and companies.
Depreciation on new plant and machinery has been reduced from 50pc to 25pc. This may adversely affect the already existing industry and may also have a negative impact on newly-established industrial units in the country, experts said.
Proposal to increase rate of withholding tax from 10pc to 15pc on prize money given on prize bonds will have adverse impact on savings because this is likely to discourage investment in prize bonds.
This will also directly affect government borrowing due to lesser saving rate in the country.
