RAWALPINDI, May 23: The Rawalpindi Chamber of Commerce and Industry (RCCI) on Thursday asked the government to slash the rates of personal and corporate income tax to a maximum of 26 per cent.

In its budget proposals for 2003-04, the RCCI said the reduction should be done in a one-go or gradually over the period of three years. It said the rates of income tax — personal and corporate — were extremely high. “Pakistan should follow the example of investment-friendly countries, like Singapore where the maximum tax slab is 26 per cent”.

The procedure for withholding tax needs revision. At present all the penalties are on the withholding agent in case of failure to deduct the tax, whereas the agent has no legal power to forcibly deduct tax from his suppliers. In most cases, the RCCI added, the agent ended up paying the suppliers tax out of his pocket.

The withholding agent should be given the option of reporting non-compliance by suppliers instead of being penalized, the chamber suggested.

The proposals said section 127 of the Income Tax Ordinance 2001 stipulated that a mandatory deposit of 15 per cent of the disputed tax for filing of first appeal be made, which is tantamount to the assessee being penalized before the merits of the case are even examined. This stipulation should be removed, particularly since in case of rejection of appeal, recovery is allowed for principal and additional tax in cases from the date of issuance of assessment order.

The compulsion limit for maintenance of books of accounts be fixed at Rs500,000.

The RCCI demanded introduction of education allowance for salaried individuals with school-going children at the rate of Rs300 per month per child above the age of four years.

Section 122, sub-section 5, of the income tax ordinance empowers a commissioner to reopen the previously completed assessments and to re-amend them as many times as may be necessary within six years of the original assessment, it said.

This clause places the assessee at the mercy of the revenue officers till six years from the date of original assessment. The options available to the revenue officer prior to the ordnance be restored, it demanded.

It said that the rates of surcharges and additional tax and other penalties be reduced, adding that more appellate authorities be appointed for speedy disposal of appeals and the command of appellate authorities be shifted to the Ministry of Law and Justice.

The rate of GST should be reduced to a maximum of 10 per cent from 15 per cent so that it should be applied uniformly across all industries and products, except those that mostly affect the common man, such as medicines, sugar, flour, newspapers and books, the proposals said.