No more exemptions under income tax

Government decides, in principle, to revoke all unnecessary exemptions under income tax.

ISLAMABAD: The federal government has decided, in principle, to revoke all unnecessary exemptions under the income tax and abolish final tax regime (FTR) for several sectors including imports and exports, dividends, transporters, contractors and services, bringing them under the normal tax regime (NTR), according to sources in the Federal Board of Revenue (FBR).

Meanwhile, suggestions for reducing the rate of withholding tax are also under consideration.

The abolition of exemptions and the FTR are based on the recommendations of the Reformed Coordination Group, which after finalisation by a committee of high-ranking FBR officials will be forwarded to the finance ministry for approval next week.

The recommendations come amidst government’s efforts to increase the tax-to-GDP ratio and promote documentation of economy. The FBR is hopeful that bringing the above-mentioned sectors under NTR will help achieve both these objectives.

Published in The Express Tribune, October 19^th, 2010.