KARACHI: Zakaria Usman, President FPCCI and ECO CCI, said on Monday that the government could not earn more revenue from income tax on rentals income by adopting a uniform rate of 10% income tax rather to put the tax payers in different tax slabs and complex calculations of income tax on rentals.
He said in a statement that different slabs introduced during budget 2013-14 should be abolished because those slabs had opened a window for misdeclaration, corruption and tax evasion. The landlords keep fake receipts to evade the actual rental income to avoid payment of income tax as per actual slab.
While sharing his views about the tax collection, he said that tax could not be collected by force. “The public would like to pay taxes without fear if rates and policies of taxes are rationalized and the tax payer should not be indulged into unnecessary record keeping and complex calculations. The government should adopt soft policies for collection of revenues through different taxes.”
He further said that due to abrupt increase in the tax on rental income from 10% to 24% approximately, the rentals of the warehouses had been increased manifold. “The government is well aware about the fact that there is an acute shortage of warehouses in Pakistan. The businessmen and traders have to get the warehouses on rent to procure and store their goods. In view of the increased rate of income tax, the landlords of the warehouses have enhanced the rent due to which the cost of doing business is automatically increased and ultimately the end consumer has to bear this cost,”Usman said.
He further said that FPCCI in its pre-budget proposals had already urged FBR to reduce and fix the tax rate on rental income at a uniform rate of 10% with full and final settlement of tax liability. “This will incentivize and encourage the tax payers to pay their tax liability honestly and willingly without fear. The mechanism of low tax rates will enable the government to broaden the tax net with new tax payers,” he concluded.