NA panel dilutes tax bill 2024
The National Assembly Standing Committee on Finance on Wednesday adopted a softer version of a bill to ban purchases of cars, investment in stocks and properties beyond a certain value by ineligible persons but linked its approval by the National Assembly with budget.
Headed by PPPP MNA Syed Naveed Qamar, the committee instructed that the modified version of the Tax Laws (Amendment) Bill 2024 be included in the Finance Bill 2025. The committee further decided that the modified bill's approval will be secured from the National Assembly along with next fiscal year's budget.
Unlike in the past when the National Assembly standing committee on Finance was not allowed to discuss the Finance Bill, this time the committee would go through the new taxation proposals after changes in the rules.
The modified version is quite different from the original bill proposed by the Federal Board of Revenue. It exempts a major segment of the society from the applicability of the law. The definition of the eligible persons has been expanded and the list of the assets that can be used to justify the purchase has been enlarged.
The committee decision came on the recommendation of a sub-committee in which PTI's Usama Mela and MNA Jawed Hanif played important roles.
The government had introduced the Tax Laws Amendment Bill in the National Assembly to ban economic transactions by the ineligible persons – the ones who do not have sufficient declared cash equivalent resources to buy a property.
According to the proposed legal amendment, a person cannot buy a property until the assets declared in his last year's tax returns are sufficient for the purchase or the person will submit a new statement to disclose the source of buying the property. The FBR has not yet developed a real time safe technological solution where the buyer is required to file the declaration.
The FBR had proposed Section 114C as an additional layer of declaration and the FBR still had the legal authority to verify those assets, once the purchaser submitted its income and wealth statement every year.
There are two significant amendments by the standing committee. According to a change in the proposed Section 114C, the new law cannot be implemented without determining the value threshold by the federal government. The "property transactions conducted by common citizens and the lower- and middle-income class, particularly first-time buyers or those purchasing their primary residential property, are not impacted" by the new legislation.
The definition of the eligible persons has also been expanded by including the immediate family members' assets to justify the purchase.
Importantly, the definition of "sufficient resources" has also been enlarged by adding local and foreign currencies, fair market value of gold, net realised value of stocks, bonds, receivables or any other cash equivalent assets as may be prescribed". The barter transactions have also been allowed to settle the value of one plot against another plot.
In the past, the government had also imposed withholding taxes to encourage people to become tax filers. But people have been filing the tax returns just for the sake of undertaking a property transaction and the FBR seemed satisfied with only getting an extra amount of taxation instead of going after them for not fully paying their taxes on actual incomes.
It was also decided that even if Section 114C was passed in the budget; it would not come into effect until the exemption value was notified by the federal government. The committee also amended the clause related to the immediate family members and introduced the definition of dependent children instead of using the terms son and daughter.
The non-resident Pakistanis and the listed companies will be exempted from filing the additional information disclosure.
Some of the members of the committee had in the past expressed reservations about relaxing these definitions. The committee's decision will exclude 95% people from the purview of the new amendments and it means that there can never be true documentation in Pakistan," said MNA Jawed Hanif Khan in February this year.
ZTBL turns around
The National Assembly expressed reservations against the government's decision to sell the Zarai Taraqiati Bank Limited despite it having been turned around and being the only specialised bank that serves the under-privileged farming community.
The committee decided to raise the matter of the ZTBL privatisation in the National Assembly to put pressure on the government to drop the transaction.
The ZTBL's listing in the privatisation programme has stopped the progress on the new information technology programmes and we cannot even hire a person despite pressing needs, the ZTBL president Tahir Yaqoob Bhatti informed the standing committee.
Being a three-time former privatisation minister I can sense that the bank's privatization cannot happen in the next two years and there is no rationale to stop the important work at the bank, remarked Syed Naveed Qamar.