The Federal Board of Revenue (FBR) has refused to share income tax returns with provincial authorities, citing confidentiality under Section 216 of the Income Tax Ordinance (ITO), as disagreements persist over the taxation of agriculture and livestock income.
According to a news report, this issue was discussed during a recent National Tax Council (NTC) meeting chaired by Finance Minister Muhammad Aurangzeb. The finance minister stressed the need for mutual data sharing between federal and provincial governments, including income tax data.
However, Federal Board of Revenue (FBR) officials clarified that complete returns could not be shared due to legal constraints. They expressed willingness to share specific data, such as agricultural and property income, relevant to provincial revenue generation.
FBR Chairman Rashid Langrial assured provinces that specific data requests would be examined for relevance, particularly for addressing tax evasion where individuals misclassify business income as agricultural income.
Currently, the maximum agricultural income tax rate is 15%, significantly lower than the 50% federal personal income tax rate. The International Monetary Fund (IMF) has urged Pakistan to align provincial agricultural tax rates with federal tax rates.
The federal government has proposed amendments to Section 216 of the ITO to grant commercial banks and private auditors access to taxpayer data, as part of the Tax Laws Amendment Bill tabled in the National Assembly.
Additionally, the current Memorandums of Understanding (MoUs) between federal and provincial authorities on data sharing, signed under World Bank loan conditions, are due for revision.
A significant sticking point is Punjab’s inclusion of livestock income in its agriculture tax law, passed last month under IMF conditions.
FBR officials argued that livestock is a federal subject and cannot be taxed as agriculture income under provincial laws.
The federal finance minister urged Punjab to amend the law, but provincial representatives said the assembly had already approved it. The NTC referred the matter to its executive committee to align provincial agriculture laws with federal income tax regulations.
