960412

Budget proposals

RCCI suggests

abolition of PSI

RECORDER REPORT

ISLAMABAD: The Rawalpindi Chamber of Commerce and Industry (RCCI) has proposed abolition of pre-shipment inspection, introduction of Special Industrial Zones (SIZs) and Capital Value Tax (CVT), reduction of duty on gold, and a number of exemptions and amendments in the income tax and wealth tax laws for the budget 1996-97.

In its pre-budget proposals, submitted to the advisory council of the budget, RCCI has suggested that preshipment inspection (PSI) should be abolished to stop over invoicing and the old Customs system should be restored. In case the PSI system is to be continued, the preshipment certificates should be issued before shipment and evaluation of the PSI should be accepted by the customs authorities. The Chamber has proposed that duty on gold should be brought down to 1 percent to curb smuggling of the commodity.

The chamber has also proposed increase in the exemption limit of salaried and non-salaries class. RCCI is of the opinion that the basic exemption of Rs 40,000 for non-salaries and Rs 50,000 for salaried assessees has become irrelevant due to high inflation. The exemption limit should be enhanced to Rs 100,000 for non-salaried and Rs 120,000 for salaried assessees, while perquisites should also be exempted upto a certain limit for businessmen.

In future, keeping the inflation rates in view, there should be indexation of exemptions limit or regular basis and the addition of perquisites rules 10, 13, 14 for conveyance provided by the employer should be enhanced depending upon the engine capacity of vehicles, the chamber proposed.

Concept of base year and filing of estimate be introduced so as to bring section 13-D in line with section 53 (1) and section 53(2) of the Income Tax Ordinance 1979 and the limit for payment of advance wealth tax should be enhanced to at least 5,000,000 rupees of taxable wealth.

The penalties prescribed under section 18 of the wealth tax act 1963 should be rationalised and a maximum limit of penalty should be fixed because in a large number of cases, the tax payable is in few hundreds and on the other hand the penalty runs into thousands.

The RCCI is of the view that present statutory exemption of Rs 1,000,000 was fixed in the assessment year 1985-86 which should be enhanced and brought in line with the value of rupee in 1985 in comparison to what it is today.

In case of property, the RCCI said that the method of valuation of vacant and self-occupied properties by adopting the rates fixed for the purpose of Stamp Duty and prevailing market rates of construction is highly discriminating in comparison with the similar property let out.

Instead, it proposed that both let out and self occupied properties should be valued based on their G.A.L.V. and the concept of depreciated value vis-a-vis the prevailing rate of construction should be introduced for valuation of covered area.

The RCCI has demanded that the loans or advances given by the proprietors, member or partner of firms, sponsors and directors of company should be excluded from the purview of section 12(18) and 12(18A) of the Income Tax Ordinance, 1979.

It has also demanded that companies with paid-up capital not exceeding Rs 5,000,000 should be exempted from income tax under sub-section of section 50 of the Income Tax Ordinance, 1979.

All sums deducted or collected under the provisions of section 50 of the Income Tax Ordinance, 1979 are required to be deposited within one week from the date of deducting or collection, which requires a constant and regular work load on the deducting or collecting authorities.

It is therefore, suggested that the tax deducted or collected be allowed to be deposited on quarterly basis by 15th of October, January, April and July. Alternatively, all deductions or collections made during a calendar month should be allowed to be deposited by 15th of the following month.

At present, in large number of cases huge demands have been raised against the persons who have failed to deduct tax under section 50 by treating them as "assessee in default" for the amount of tax which should have been deducted and additional tax thereon under section 86 of the Income Tax Ordinance, 1979.