KARACHI, March 18: The Central Board of Revenue is presently framing tax rules for the Income Tax Ordinance 2001, which is to be implemented from July 1, 2002.

This was stated by member co-ordination CBR, Mansoor Ahmed at a workshop on “the Income Tax Ordinance 2001”, organized by the Income Tax Bar Association, Karachi (ITBAK) here on Monday at the auditorium of Income Tax Building.

However, Mansoor said, in case these rules could not be framed by the time the new ordinance was implemented the existing tax rules of 1982 could be used to meet the situation.

Undoubtedly, he said the basic rules should come along with the new ordinance, but there was a ‘saving clause’ in the Income Tax Ordinance, which allowed the use of existing tax laws to be used up to June 30, 2003.

Consequently, Mansoor Ahmed said there would be a transition period during the implementation of new ordinance and some problems and difficulties would do emerge, but they could only be resolved if they are confronted directly.

He further said that under the new ordinance the entire responsibility of assessment rested with a taxpayer and the tax department could only go for audit of the return when it got some clue of evasion.

Mohammad Shabbar Zaidi, who facilitated the workshop, said that under the new tax ordinance there was no room for immunity because no where in the world such facility was available to taxpayers.

He said under the present tax laws three categories of assessments are being made — self-assessment scheme, withholding tax regime and normal tax. Under modern tax system, he said, both the withholding and SAS could not work as there was no room for immunity in tax collection.

As a result of this, Shabbar Zaidi said, the state of Pakistan had been the biggest loser for the last 50 years while other stakeholders in revenue collection, including taxpayer, assessing officer, CBR and tax consultant, who works as facilitator, some how got benefit from this system.

He pointed out that the CBR does not have the capacity to audit more than 58,000-68,000 tax cases, and at present it only collects Rs120 to Rs135 billion and out of this Rs10 to Rs20 billion come from assessment process while the balance from withholding tax and voluntary compliance.

There were two sessions of the workshop. During the first session preamble and introduction about income tax and process of assessment was made followed by question, answer session. In the second session comparative analysis of the new ordinance and special provisions for non-residents along with withholding tax provisions were discussed.

ITBAK president Abdul Qadir Memon said despite the great expansion in the provisions of withholding and introduction of presumptive tax regime in 1990s the government could neither fetch more than one million taxpayers nor did it succeed to substantially increase tax GDP ratio, which even today was below 13 per cent.

Among many factors which result in lesser revenue collection, he said, lack of awareness amongst taxpayers about their responsibility, un-matchable discretionary powers of tax officers, changes in tax laws on ad hoc basis, treatment of taxpayers as thieves were those factors which no government took into account.

Memon said there was a dire need for tax reforms in the country not only to achieve the desired revenue but also broaden the tax base as well by gaining the confidence of common man in the government and the tax machinery.

However, the ITBAK president expressed the hope that the new tax ordinance coupled with major changes like introduction of large taxpayer facilitation centre, etc., would bring some positive change provided the day to day irritants like multiple audits, deliberate delay in providing tax credits, re-opening of assessments in a whimsical manner, etc., are properly taken care of.