Lahore School of Economics

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The Tax Base

Jalal Ahsan, FCA

The Pakistanis are the most heavily, rather over-taxed, people in the entire South Asia--not only total taxable population but million of those having below taxable income are paying taxes at source, but not claiming refunds by filing of returns. In most of the cases, the tax deducted is the full and final discharge of liability. Section 115(4) of the Income Tax Ordinance, 2001 says that this class of taxpayers is only required to file statements and not regular returns. Since only a fraction of taxpayers file returns or statements, a wrong impression exists that our income tax base is narrow. According to Pakistan Telecommunication Authority (PTA), there were 118 million mobile users in Pakistan as on 30 June 2012. A huge population, not less than 60 million (if we exclude multiple and inactive subscribers), paid both 10% income tax and 19.5% sales tax for using this facility in 2011, but only 513,044 individuals filed income tax returns. Federal Board of Revenue (FBR) did not bother to issue notices to them after utilizing data available with the service providers. Majority of the mobile users might not have taxable income yet they never bothered to claim the tax withheld back by filing tax returns If Pakistan has 10 million individuals having taxable income of Rs.1.5 million (a very conservative estimate), total income tax collection from them should have been Rs.3750 billion. If we add income tax collected from corporate bodies, other non-individual taxpayers and individuals having taxable income up to Rs.1,000,000, the gross figure would be nearly Rs.5000 billion. FBR collected only Rs.716 billion as income tax in fiscal year 2011-12 showing a whopping gap of Rs.4984 billion in income tax alone.

Mr. Jalal Ahsan, FCA specializes in Income Tax / Sales Tax planning preparation of returns. He carried out audits of listed and non listed companies and development of accounting systems. He has also represented clients in signing of acquisitions, non competition, trademarks, royalty and technical agreements.Mr. Ahsan has also served as a nominee of Chairman, National Accountability Bureau in the Reconciliation Committee of the State Bank of Pakistan.

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posted by S A J Shirazi @ 5/30/2014 04:40:00 PM,

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