ISLAMABAD (April 28 2003) : The government has conveyed to the International Monetary Fund (IMF) that the Central Board of Revenue (CBR) could not provide the exact number of income tax exemptions to be abolished before announcement of the coming budget 2003-04.
However, the total exemptions to be taken away in coming budget would certainly not be 55, but quite less.
Sources told Business Recorder here on Sunday that Pakistan government officials have informed the Fund mission recently in Washington that the income tax exemptions could not be abolished without taking prior approval of parliament.
The list of income tax exemptions to be withdrawn would be finalised in budget, and tax authorities could not give number at this stage.
Sources said that the authorities have not never specifically mentioned that 55 exemptions would go in the coming budget.
The total number of exemptions to be taken away would be definitely less than 55 as a number of income tax exemptions have already been abolished from the list prepared by Committee to Revise Income Tax Ordinance (CRITO).
Similarly, a reasonable number of exemptions were taken away during last two financial years and 29 time-bound exemptions have also been withdrawn.
The procedure to abolish income tax exemptions contains a number of stages. First, the budget committee of the Cabinet would review the exemption to be withdrawn. Afterwards, the final review would be done by federal Cabinet before making them part of the Finance Bill.
Finance Bill would be presented before the parliament for approval before enacting the law, they said.
As per Income Tax Ordinance 2001, it is mandatory for CBR to take prior approval from the National Assembly for making any amendment in the Second Schedule of the Ordinance.
The second Schedule of the Ordinance 2001 covers exemptions and tax concessions including exemption from total income, reduction in tax rates, reduction in tax liability and exemption from specific provisions.
The new Finance Ordinance would notify the subject exemptions.
The tax authorities require approval of the National Assembly for adding any clause or condition; omitting any clause or condition and making any change in any clause or condition of the Second Schedule of the Income Tax ordinance 2001.
Sources said that the withdrawal of income tax exemptions would be one of the toughest decisions to be taken by the new government to strengthen economic reforms agenda.
However, it is difficult to figure out the exact amount of huge revenue impact as under income tax law, the persons enjoying exemptions are not required to submit the details of the exempted amount to CBR.