Sunday, May 16, 2010

Pakistan Government is going to introduce amendments in Income Tax Ordinance 2001

In a new move to increase tax collection, the Federal government of Pakistan is going to introduce an amendment in its Income Tax Ordinance 2001 through Finance Bill 2010 which would block imports of those who did not file their income tax returns and withhold tax statements from July 1, 2010.

This would help the government to bring in the manufacturers, operating in the unorganized sector of the country, which is almost equivalent to the organized sector, under tax radar. Officials believe that it would force business people in the unorganized sector to come forward and “meet the national obligation.”

According to a senior FBR official, any taxpayer, who would not file monthly withholding tax statement or income tax return, would be considered as “inactive tax payer” and his or her imports would be automatically blocked from the next fiscal year.

In order to successfully cover the negative tax payers, the Risk Assessment Module of the ‘One Customs’ clearance system has been modified.

Any non-filers or withholding tax statement, if registered under sales tax, would be first restricted from the sales tax side and then will be registered with the income tax department.

A review mission from the World Bank also recommended the Federal Board of Revenue to introduce amendments in the Income Tax Ordinance in the coming budget of 2010-2011.

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