After December 2012, the business and industrial community was also penalized with a series of controversial SROs introducing large scale changes in taxation structures and enhancing the rates of Sales Tax, With-Holding Tax
. The FBR has given a free hand to the Officers of Inland Revenue to manually select cases for audit, issue demands and take actions against registered persons under various pretexts to generate more revenue to meet the targets for current financial year, which had already created havoc for the business and industrial community.
It would help promote the construction industry and the associated industries-the duty on tyre and scrap has been cut to half at 10 percent from 20 percent-the limit of with-holding tax
on withdrawal of cash from a bank has been doubled to Rs 50,000 from Rs 25,000-- the Export Development Fund has been enhanced to Rs ten billion.
iii) Contractors/sub-contractors for designing, supply of plant and equipment and construction of power project will be subject to with-holding tax
[at] 4% of gross receipts which will be the final discharge of income tax holiday.
In its proposals for national budget 2012-2013 sent to FBR, the premier chamber of Pakistan said that high rates of Customs Duty, Sales Tax and With-Holding Tax
on import of raw materials, intermediate and finished goods must be brought down to curb smuggling and illegal imports under the guise of Afghan Transit Trade.
The tax regime not only applied tax on income but all the other taxes like Turn Over Tax of half per cent and With-holding Tax
of 2.5 per cent were also applicable to the Modaraba transactions.
Similarly, with-holding tax
of 30 per cent on services provided by non-resident contractors is also to be reduced to 3 per cent as applicable to resident contractors and it shall be treated as final settlement of tax liability.
Introduction of capital value tax (CVT) and increase in the spread of with-holding tax
net (CVT) and increase in the spread of with-holding tax
net did constitute measures to broaden the direct tax base and hit at the right sections of the population, however, their impact was marginal and much more remains to be done.