KARACHI, June 9: Institute of Chartered Accountants of Pakistan (ICAP) president S.M. Shabbar Zaidi has said that real estate, capital market and cash economy, which remained ‘no go areas’ for tax regime, are now being brought into net in the budgetary strategy.

“Levying tax is not an issue,” he remarked to point out that “it is collection which is a challenge”. He was addressing a seminar on 2006-07 budget organised on Friday by the ICAP.

The budget he pointed out answered a lot many questions that were being raised in the past. “Why agriculture income is not taxed. Why capital markets are spared and why defense spending are higher,” were the questions that were being raised and these were being answered in the budgets.

The new budget, he said was a balanced document as it explored hitherto untapped areas. With fast changing tax environment in the country, Mr Zaidi was confident that there would be no tax evasion in a year or two.

He particularly appreciated the introduction of e-intermediaries for filing of sales tax return. The procedure and mechanism for filing this return was yet to be formulated.

He further said that it had now become mandatory to maintain the separate records of sales tax in the accounting books. This would be the double entry system and serve as the check and verification. There was no trend of recording VAT in the accounting journals, which created ambiguities, he said.

He said services were being brought within tax net and mentioned the levy of 5pc excise duty on bank services, 7.5 per cent on insurance and reinsurance and extension of VAT ambit.

Ibrahim Sidat in his speech agreed that the income tax measures may impact low salary people more than those of in the higher salary bracket.

Masoud Ali Naqvi spoke on macroeconomic aspect of the budget.

Regional Income Tax Commissioner Abrar Ahmad who was chief guest assured those in salary bracket of Rs0.4m to Rs2m, who are under negative impact of taxation measures, would be given some relief.