Govt frees AWT from income tax

Tarin says trust was inserted through separate amendment, was okayed by house

ISLAMABAD:

The government has exempted income of the Army Welfare Trust by separately moving an amendment just before the approval of the finance bill by the national assembly on Tuesday.

The Army Welfare Trust was not part of the amended finance bill that the government had tabled in the national assembly and also circulated among the treasury and the opposition members, showed a copy of the amended finance bill and confirmed by the national assembly members.

However, before the budget approval, Finance Minister Shaukat Tarin introduced a new amendment at the floor of the house.

“That in the Finance Bill 2021, as introduced in the National Assembly, in clause 5, in sub-clause (96) in paragraph (A), in sub-paragraph (viii) in the Table Armey Welfare Trust shall be added,” according to the separate amendment introduced in the national assembly.

Read: Senate panel for exempting AWT from tax

President Dr Arif Alvi on Wednesday gave ascent to the finance bill, which has come into force from today (Thursday) July 1. Both the Army Welfare Trust and Fauji Foundation have been exempted from the purview of the income tax law.

The amendment has June 28 as the date while the budget was passed on June 29. This suggests that the government did not deliberately make the Army Welfare Trust part of the amended Finance Bill.

“Army welfare trust was inserted through a separate amendment and was approved by the house,” said Tarin while replying a question. The minister said that it was amendment number 25 and part of his set of amendments.

It was JUI-F led senate standing committee on finance that had recommended exempting income of the Army Welfare Trust (AWT) from tax. The trust runs businesses for welfare of retired army personnel. The senate standing committee had recommended exempting the income of the AWT on a proposal moved by PTI’s Senator Faisal Saleem. The trust is now not required to file an annual income tax return. JUI-F Senator Talha Mehmood chairs the meeting.

PPP’s Senator Saleem Mandviwalla had also backed the proposal to exempt the trust’s income.

The AWT owns public listed companies like Askari General Insurance and Askari Life Assurance. Its non-listed public companies are MAL Pakistan and AWT investments. Among the private limited companies are Askari Aviation Services, Askari Guards, Askari Enterprises Fauji Security Services and Askari Development and Holding.

The part one of the second schedule exempts incomes of entities and individuals from tax and the committee has recommended including the trust in part one of the second schedule, which has taken it out from the purview of the income tax law.

The national assembly has also approved income tax exemptions for Islamic Naya Pakistan Certificate Company, Abdul Sattar Edhi Foundation, Indus Hospitals, Privatization Commission of Pakistan, Fauji Foundation, The Securities and Exchange Commission of Pakistan, Sundas Foundation, Ali Zaib Foundation, Audit Oversight Board, Make a Wish Foundation, and the Citizens Foundation.

Read more: Senate panel opposes exempting parties from income tax

It is a grave constitutional violation, if a separate amendment is made in the bill without giving proper notice, said Dr Ikramul Haq, Advocate Supreme Court of Pakistan and a renowned tax expert.

Bringing amendments in the finance bill after it is being thoroughly debated in the Senate also raises serious constitutional issues, said Dr Haq.

He said that it has become a practice that the government introduces amendments in the finance bill much after the Senate has given its recommendations within 14 days of introduction of the finance bill in both houses of the parliament.

Although Article 73(3)(a) of the constitution states that a bill shall not be a money bill if it provides for the imposition or alteration of a fee or charge for any service rendered, this does not mean that if a particular levy/contribution does not fall within Article 73(2) it must necessarily fall within Article 73(3), said Dr Haq.

He said that sub-articles (2) and (3) are not mutually exclusive. There may very well be certain levies/contributions that do not fall within the purview of Article 73(3) but still do not qualify the test of Article 73(2) and therefore cannot be introduced by way of a money bill, and instead have to follow the regular legislative procedure.

Published in The Express Tribune, July 1^st, 2021.

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