KARACHI, Aug 30: The Income Tax Bar Association, Karachi (ITBAK) has suggested to the Central Board of Revenue (CBR) to lower the tax rate from 30 per cent to 25 per cent on salaried class, and that it should not impose tax on excess perquisites of employees drawing salary above Rs600,000.

These recommendations were made at the concluding session of two days (Aug 29-30) Workshop on Income Tax organized by the ITBAK. Experts on tax laws and systems deliberated on some unanswered tax clauses and sections of the tax laws.

The largest tax bar of the country also asked the CBR to clearly define the term ‘salary’ to serve the purpose of Section 21(k) of the Income Tax Ordinance 2002.

The closing session was chaired by Saeed Ahmed Zaidi, Member Legal, Central Board of Revenue and was largely attended by tax consultants and chartered accountants.

The President of the ITBAK, Saqib Masood, while giving details about the recommendations reached in the workshop said it was also suggested that adjustment of tax credit, covered under section 61 to 64 should also be allowed for withholding tax from Salary.

He explained the presently such credits are not adjusted and the employer should be empowered to allow credit on such transactions including donations etc.

The bar also demanded that the benefit of ‘amalgamation’ should be extended to all types of mergers particularly when they are sanctioned by the courts or any other authority.

It was also pointed out that tax on export proceeds under section 154 should be on fob basis, which is required to be used for allocation of expenses under the rules.

The Tax Bar sought clarification from the CBR that tax collected at import stage on goods for own consumption is adjustable, except in the case of ‘commercial importer’. It has been demanded that the term ‘commercial importer’ should also be defined.

Many such issues were raised where the tax law was silent and the experts have to seek solution and answer from the CBR. Procedure for approval of ‘gratuity fund’ by the CBR was also demanded.

It was also suggested that anti-avoidance provisions contained in Section 108 relating to ‘transactions between associates’ should be applicable on transactions between a resident and non-resident persons. Similarly, it was also demanded that proper system for implementation of anti-avoidance provisions should be in place.

It was particularly pointed out that distinction and treatment of ‘foreign loss’ should be eliminated as it was creating distortion and causing heart burning amongst local investors.

During the workshop extensive nature of papers were read by leading tax consultants and eminent lawyers. Some retired revenue officers presently entered into consultancy also made their presentation about different tax laws and their effect on taxpayers and the society as a whole.

The most interesting paper was read by Amjad Javed Hashmi who dealt at length on ‘Taxation of Non-residents.’ A leading Supreme Court lawyer Mohammad Ather Saeed read his paper on ‘Introduction to Tax Agreements,’ which was widely appreciated.

However, S M Shabbar Zaidi as usual maintained his intellect and touched such issues which normally do not catch the thoughts of average tax consultant.

Shahid Jamal, ex-director general LTU, Karachi spoke on ‘philosophy of taxation and core concepts,’ Asif Kasbati read his paper on ‘salary taxation,’ Abdul Qadir Memon on ‘payment and refund of tax,’ Salman Haq touched the issues concerning ‘non-profit organization and taxation of specialized business,’ Ali A Rahim read paper on ‘returns, audit, assessment and appeals and Shabbir H Vejlani spoke on ‘tax credits and set-off and carry forward of losses.’