Destiny of super-tax, tax on bonus shares hangs in the balance

0
304

ISLAMABAD: As the budget announcement looms on Friday, the authorities are deliberating regarding the destiny of key revenue measures.

A report published in Dawn states according to sources in the Revenue Division aware of the developments shared the destiny of three taxes namely super-tax, tax on bonus shares and undistributed inter-company dividends remain undecided.

These three tax measures have been met with extreme criticism with the tax on bonus shares being introduced in Finance Act 2014 and the rest being brought in 2015.

The super-tax was enacted in 2015 as a one-off tax to meet the expenditures of the Armed forces during the Operation Zarb-e-Azb and was supposed to generate funds for the rehabilitation of the population displaced by the operation and was to be implemented for only a year in the budget of the fiscal year 2014-15.

Major industry associations like the Overseas Investors Chamber of Commerce and Industry have demanded an end to these taxes in their respective budget proposals.

The tax regulator collected Rs14.5 billion during FY 2015-16, with the amount rising to Rs22 billion in FY 2016-17.

A 4 percent super-tax was levied on banking companies and 3 percent on those taxpayers having an income of around Rs500 million in the tax year 2014-15.

From the tax on bonus shares, the government pocketed Rs240.64 million in its first year of enactment in FY 2014-15 and Rs460.86 million in FY 2015-16 and data for other years hasn’t yet been ascertained.

The government is contemplating the extension of tax credit and relief on the installation of new plants till June 2019 and currently, it is set to end on June 30th, 2018.

Those not filing their income tax returns are expected to see further increases for various withholding tax rates (WHT).

The no of WHT taxes has increased to 56 from 36 in the last five years and it has constituted around 70 percent of the entire direct tax collection.