Conditions are getting worse as a result of FBR.
Businesspeople have approached the Ministry of Finance with a request to postpone the collection of taxes on presumed income.
KARACHI: According to businesspeople, the Federal Board of Revenue (FBR) is acting desperatley by taking actions that are worsening the country’s economic prospects as duty collection declines along with the decline in imports.
Mohammed Tariq Yousuf, president of the Karachi Chamber of Commerce and Industry (KCCI), requested in a statement that the Ministry of Finance extend the deadline for filing taxes under Section 7E of the Income Tax Ordinance 2021 (tax on deemed income) from December 31, 2022, until a solution has been reached amicably by all parties.
According to the business community, Section 7E, added by the Finance Act 2022, violates the terms of Article 142 of the Constitution, he noted.
In an interview with The Express Tribune, former KCCI senior vice president Muhammad Ibrahim Kasumbi said, “Under Section 7E, the FBR wants to collect tax on deemed income from the second property of a taxpayer instead of really determining what income he makes or whether the property is sitting idle and yielding no income at all.”
For instance, the revenue office will assess tax based on the rent it estimates the property will bring in if it has a value of Rs 20 million.
He emphasised that although the businesspeople operating in the documented sector provided the FBR with all of their information from which it obtained information, the FBR nonetheless assessed income tax on rent whether or not the property was producing an income.
Kasumbi continued, “FBR is upset and making arbitrary decisions to fulfil expectations.
He emphasised the necessity for a tax body makeover because it had a bad practise of collecting the majority of the taxes at the import stage.
But now that it has fallen short of its goals, it is pestering the current taxpayers rather than going after the bigwigs in the agriculture and real estate sectors who receive exemptions.
He requested that the FBR go after the corrupt and not target businesspeople who had purchased homes in keeping with their actual needs as well as money launderers who were cleansing their black money.
Businessmen cannot afford to keep their money inactive for an extended period of time, he said, adding that they wanted to move money around to generate income and that tax should only be levied on actual income, not deemed income.
The FBR was prohibited from using any coercive measures while court procedures were going on, according to a plea that was also filed in the Balochistan High Court, according to the KCCI president.
Because of this, he emphasised, “the last date of tax payment should be delayed until the constitutionality of Section 7E is resolved,” noting that many people had been unable to complete tax returns because of the ambiguity.
“To enable all stakeholders to collaboratively identify a solution to this issue, consultation between the business community and the FBR is required.”
