Thursday, June 4, 2009

Income Tax Bar shows serious concern against SRO 392(1)2009

The Income - Tax Bar Association has taken a serious note to the amendments made in Income Tax Rules 2002 vide SRO No. 392(1)/2009 dated 19th May 2009, even though the Bar and other Stakeholders had objected to the amendments.


The following needs to be added, as an explanation, after the formula, in Rule 13[3][a], inter alia, inserted in the Income Tax Rules, 2002, through SRO 392 of 19-05-2009, so as to eliminated misinterpretation.

“Gross Receipts” means the “FOB price” and “Ex-Factory Price”, respectively, of the goods exported and sold in Pakistan.

RULE 186

Amendments have been made to incorporate certain changes for arrest of defaulting tax payers. It is expected that these powers will create harassment and an atmosphere of mistrust between the tax payers and the assessors. The Bar is of the opinion that FBR should frame rules whereby the authority to invoke proceedings for arrest etc., should only be with the Director General of the Region and the DG should carefully study each case, individually before invoking these provisions.

RULE 213

A new rule has been incorporated in the law whereby, all NGO’s paying salaries over 50% of the total receipts of the NGO, will be refused to be registered as a trust entitled for exemption / tax rebate.

It was requested to the FBR that this condition will be very harsh for those NGO’s which are running schools and hospitals, where the salary paid is the heaviest expenditure of the institution. The enactment will not only debar the exemption status of a NGO, but will negate the government policy towards expending the educational and health facilities being provided in Pakistan.

RULE 228

There was a general consensus amongst the members, that this change is regressive and will lead to abuse and misuse by the tax officials as discretionary powers have been given to them. Rule 207 A to Income Tax Rules 1982 (repealed) was introduced to curb and eliminate the misuse of discretionary authority of the property valuation that was available with tax officials.

Alternately, it was suggested to the FBR that the rates notified in the District Officer (Revenue) by the Provincial Government both for plots and constructed immoveable properties be appropriately rationalized / modified and increased.

This suggestion was given to encourage fair play.

The Bar has taken a very serious view of this amendment and is of the opinion that this change will only enhance the level of corruption and will nullify the scheme of self assessment as envisaged by the policy of the government, which is planning to reduce the powers of the assessing authorities and encourage fair play.

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