Sales Tax, Income Tax, FED Issues: FY23 Budget Provides Single Document for Businesses and General Public
ISLAMABAD: Business community and general public could have “one” fiscal document in the budget (2022-2023) to address federal sales tax, income tax and excise duty issues from the next fiscal year.
Sources said company registrar that certain uniform procedures would be combined under the new Inland Revenue Code, combining the Income Tax Ordinance, 2001, the Sales Tax Act, 1990, Federal Excise, 2005, and the Islamabad Capital Territory (Sales Tax on Services) Ordinance, 2001.
For example, the appeal process is the same for sales tax and income tax.
Said appeal procedure would be combined under the new Inland Revenue Code for federal income tax, sales tax and excise duty.
As the nature and structure of sales tax and income tax cannot be changed; therefore, the new document would have separate chapters on sales tax, income tax, and federal excise duty to address tax issues. Sales tax and income tax are different systems and cannot become common.
For the current fiscal year, the sections and provisions of the sales tax and income tax laws would remain separate.
However, the taxpayer can access a single document to read all relevant sales tax and income tax provisions.
Federal Board of Revenue (FBR) Chairman Dr. Muhammad Ashfaq Ahmed has given top priority to simplifying tax laws.
Yet another “money bill” on the way?
The formulation of the Domestic Tax Code would harmonize all domestic tax laws and maximize taxpayer facilitation.
The FBR will apply a new harmonized and simplified tax code from July 1, 2022, combining the Income Tax Ordinance of 2001, the Sales Tax Act of 1990, the Federal Excise Act of 2005 and the Islamabad Capital Territory (Services Sales Tax) Ordinance 2001. .
The new law would ensure the ease of doing business by removing the multiplicity of tax laws and a plethora of rules and regulations designed to operationalize them.
The FBR, on the domestic side, implements and enforces four major tax statutes, namely the Income Tax Ordinance of 2001, the Sales Tax Act of 1990, the Federal Excise of 2005 and the Islamabad Capital Territory (Services Sales Tax) Ordinance 2001.
These four tax laws are then supported by an equal number of rules compiled in voluminous books including the Income Tax Rules of 2002, the Sales Tax Rules of 2006, the Federal Excise Rules of 2005 and Islamabad Capital Territory Rules (Sales Tax on Services). , 2001.
As a result, a taxpayer must consult virtually eight law books in order to engage with the tax system and repay their tax liability.
Copyright Business Recorder, 2022