Latest news with #IncomeTaxOrdinance2001
Business Recorder
3 days ago
- Business
- Business Recorder
Think tank seeks tax exemptions for construction sector
ISLAMABAD: An Economic Thinktank has strongly recommended Federal Board of Revenue (FBR) to exempt construction sector from advance taxes and sales tax in coming budget (2025-26) to reduce the overall burden of transaction taxes on real estate sector. According to a report of Economic policy & Business Development think tank on 'Housing and Construction Sector-Challenges and Recommendations', it has recommended the FBR to reduce transaction taxes burden during buying and selling of immovable properties. This is needed to deal with the housing deficit with 10 million units and growing day by day. Around 72 allied industries of the real estate sector are operating at only 30-40% capacity. The report revealed that the FBR should also simplify tax on deemed income basis under section 7E of the Income Tax Ordinance 2001 and implement an expeditious dispute resolution system. Overall the Economic Thinktank has recommended rationalization of tax regime on the real estate sector for 2025-26. The government should also develop comprehensive town planning framework, it recommended. The real estate revival is as a key driver of economic growth keeping in view its ability to generate employment, address critical housing shortages, and sustain 40-50 allied industries. Thinktank pointed out that the Real Estate Regulatory Authority (RERA) has been establishment, but not fully functional. To address the market irregularities and lack of regulation in the real estate sector, National Assembly had passed the 'Real Estate Regulatory Authority Act (2020)' to regulate the real estate sector in Islamabad. It also recommended that revival of Mera Pakistan Mera Ghar scheme requires urgent attention. It recommended to establish operational RERA with immediate effect; implement online building approval system; create digital mortgage platforms; develop centralized property database; implement blockchain solutions for transparent transactions; promote modular/prefab construction and develop green building standards. Thinktank has further recommended creating vocational training institutes with NAVTTC and TEVTA; implement standardized wage structures; develop safety training protocols; launch programs to retain skilled professionals and promote gender-inclusive workforce initiatives. Copyright Business Recorder, 2025
Express Tribune
21-05-2025
- Business
- Express Tribune
IT reforms sought to halt exodus
P@SHA has said that the govt will have to decide the future course – either develop the country as a digital powerhouse or remain confined as skilled individuals leave the country. photo: file Listen to article The information technology (IT) sector has warned the government that companies will shift to other countries if favourable policies are not introduced and changes are made in the existing tax regime. Addressing a news briefing on Tuesday, Pakistan Software Houses Association (P@SHA) Chairman Sajjad Syed said that investments were not brought into the country by the government in public sector industries. "Investments are invited by the private sector and the government functionaries have to be facilitators; this includes branding, infrastructure development, skill development as well as the tax and fiscal regime," he said. Syed pointed out that currently Pakistan had one of the highest tax rates and negligible certainty about the consistency of policies. He said corporate income tax was 29% in Pakistan, whereas it was as low as 9% in the United Arab Emirates (UAE) and 25% in Vietnam, which had annual IT exports of $141 billion. Other taxes and input costs were also high in Pakistan. Syed added that the IT industry had demonstrated resilience in the face of economic turbulence, contributing $3.2 billion in exports in financial year 2023-24 and it was projected to close the current fiscal year at nearly $4 billion. "An estimated $15 billion export potential is projected by 2030, but more promising numbers can be achieved if there is policy consistency, a long-term taxation regime and operational facilitation by the government to boost investor confidence," the P@SHA chairman remarked. Among the issues highlighted by the association were the need to align tax treatment between the employees of local IT firms and the independent remote workers employed by foreign companies. P@SHA asked the government to formally define remote workers in the Income Tax Ordinance 2001 as the lacuna was forcing IT companies to collect an additional 30% income tax from employees earning over Rs2.5 million annually, whereas those working for international clients did not have to pay high taxes. "This high income tax on local companies has encouraged international competitors to hire the same human resources in Pakistan at higher wages and even save some amount by paying a low income tax," Syed added. P@SHA also demanded that the government ensure continuity in tax policy and added that the IT sector in Pakistan was still in its formative growth stage. He added that policy stability was essential for sustaining the momentum and referred to a Digital Foreign Direct Investment (DFDI) event, where over $700 million worth of investment commitments were made, of which $600 million was facilitated by P@SHA. "If the tax regime is changed in the upcoming budget, there will only be two choices: either the clients leave Pakistani companies as the cost of business will increase or we shift to any conducive market like the UAE, Vietnam or the Philippines," Syed said. P@SHA has said that Pakistan's IT sector employs over 600,000 skilled human resources, but the government has to decide the future course – either develop the country as a digital powerhouse by promoting artificial intelligence or remain confined at the secondary level as high-end skilled individuals will leave the country to seek jobs abroad.
Business Recorder
10-05-2025
- Business
- Business Recorder
FY26 budget: Rates of CGT and WHT will be reduced
ISLAMABAD: The rates of the Capital Gains Tax (CGT) and Withholding Tax on immovable properties would be rationalized in the upcoming budget (2025-26) to facilitate buyers and sellers of real estate sector from July 1, 2025. Sources told Business Recorder that the rates of withholding tax would be reduced on the import of raw materials/inputs in federal budget (2025-26). The rates of withholding taxes would also be reduced on all other financial transactions except those withholding taxes where income is gained like withholding tax on dividends etc. However, the policy is to reduce rates on all kinds of withholding taxes in coming budget. As far as real estate sector is concerned, sources confirmed that the federal excise duty would be abolished in budget (2025-26). Secondly, the withholding tax on buying and selling of immovable properties would be reduced. Presently, 3 percent withholding tax is applicable on sellers under section 236C (Advance Tax on sale or transfer of immovable Property) of the Income Tax Ordinance 2001. The Capital Gains Tax (CGT) on immovable properties would be revised from July 1, 2025. Keeping in view inflation and cost of properties, the CGT needs to be rationalized. The CGT under section 37 of the Income Tax Ordinance 2001 would be applicable on sellers. The CGT is paid by the seller whenever he sells, he will have to pay the CGT at the time of filing of his income tax return. Rs265.745bn WHT paid in H1FY25: Salaried individuals emerge major contributor to kitty When contacted, a real estate expert, Muhammad Ahsan Malik told this scribe that Task Force for development of housing sector has recommended abolition of section 7E of the Income Tax Ordinance, capital value tax (CVT) in Islamabad and reduction in transaction taxes on buying/selling of immovable properties. According to the final recommendations of the Task Force, it has recommended waiver of sub section 2A of 236C pertaining to 7E declaration & approval by Commissioner, provide basic exemptions for properties valued at up to Rs 10 million, shifting non-resident verification to an online system via NADRA and uniform rate for filers and late filers to remove disparities. Task Force has further recommended abolishing section 7 E of the Income Tax Ordinance; standardizing and rationalizing stamp tax rates across provinces and ICT, abolishing CVT in Islamabad and ensuring uniform taxation policies through the National Tax Council and waiver of wealth reconciliation for investment in real estate and construction sector up to Rs. 50 million. Task Force has further recommended revision of property valuations every three years to reflect market prices and introduction of exemptions for transaction tax for specific categories, such as low-cost housing, government plots, and first-time homebuyers, Muhammad Ahsan Malik added. Copyright Business Recorder, 2025
Business Recorder
05-05-2025
- Business
- Business Recorder
LCCI rejects amendments to IT Ordinance 2001, FEA 2005
LAHORE: The Lahore Chamber of Commerce and Industry on Monday out-rightly rejected 'controversial amendments' introduced to the Income Tax Ordinance 2001 and Federal Excise Act 2005, which have already come into force from May 2, 2025 without consultation with the Chambers of Commerce and Industry and stakeholders. While addressing an emergent Press Conference, the LCCI President Mian Abuzar Shad called the amendments dangerous' and anti-business and demanded immediate withdrawal or parliamentary review through proper stakeholder consultation. LCCI Senior Vice President Engineer Khalid Usman, Vice President Shahid Nazir Chaudhry, former LCCI President Mian Anjum Nisar and members of the Executive Committee also spoke on the occasion. LCCI President Mian Abuzar Shad said that these amendments have handed a sword to the Federal Board of Revenue officials. They violate fundamental constitutional rights and undermine the very foundation of due legal process. Business Community rejects any law that empowers tax authorities to bypass judicial procedures and intimidate honest taxpayers.' He criticized Section 138(3A) of the Income Tax Ordinance 2001 which now mandates that a tax liability becomes immediately enforceable if upheld by a High Court or Supreme Court, regardless of any ongoing legal proceedings in other courts or forums. He said that this section strips the business community of its constitutional right to appeal. Enforcing tax collection without completing the legal process is a serious violation of justice. The LCCI President said that another alarming amendment is Section 140(6A), which allows the FBR to freeze bank accounts and recover funds without issuing any prior notice. This creates an atmosphere of uncertainty and fear for businesses. It not only undermines business confidence but also threatens to destabilize the financial system. He added that the new Section 175C authorizes the FBR to deploy officers to monitor production, services, or stock on any business premises. This is an infringement on business autonomy, privacy and freedom. Are Pakistani businessmen criminals that they must be monitored like this?' questioned Mian Abuzar Shad. The LCCI President said that amendments to Sections 26 and 27 of the Federal Excise Act now define the use of fake stamps, barcodes or labels as criminal offenses. 'While we stand firmly against forgery,' LCCI leadership cautioned, 'if this law is misused to harass innocent businessmen, it will lead to grave consequences. He said that FBR has now been empowered to authorize officers from other federal or provincial departments to conduct inspections, searches and seizures. This will open the floodgates to institutional interference, drastically increasing the operational hardships for the business community. The LCCI leadership demanded immediate withdrawal of the amendments or a parliamentary review process ensuring all stakeholders are heard, consultation with the business community to ensure transparency, balance and trust in tax legislation, expansion of the tax net by bringing new entrants into the system instead of harassing existing, compliant taxpayers. LCCI Senior Vice President Engineer Khalid Usman and Vice President Shahid Nazir Chaudhry said that if the government continues to ignore the voice of the business community, the Lahore Chamber will unite trader bodies across the country and initiate a constitutional, legal and peaceful protest movement. Former LCCI President Mian Anjum Nisar said that we desire economic stability and national progress, but that requires business-friendly policies — not repressive ones. Policies that destroy investor confidence will hurt Pakistan's economy. The LCCI leadership said that we support taxation, but it must be fair, just and implemented in a manner that encourages, not punishing the business community. Copyright Business Recorder, 2025
Express Tribune
04-05-2025
- Business
- Express Tribune
Businessmen slam tax ordinance
Listen to article Lahore Chamber of Commerce & Industry (LCCI) President Mian Abuzar Shad, has termed the recent amendments made through the Presidential Ordinance to the Income Tax Ordinance 2001 and the Federal Excise Act 2005 as dangerous for the business community. He stated that the extraordinary powers granted to the Federal Board of Revenue (FBR) through this ordinance threaten private business autonomy, civil liberties, and the stability of the economy. Shad called for an emergency meeting of all Chambers of Commerce and Trade Associations across the country, to be held at the Lahore Chamber on Monday. He expressed grave concern over the newly added Section 3A in the Income Tax Ordinance, which allows immediate tax recovery based on a High Court or Supreme Court decision, bypassing the due legal process. Similarly, Clause 6A added to Section 140 empowers the FBR to freeze a taxpayer's bank account and withdraw funds without any prior notice or legal proceedings, which he declared unacceptable. According to the LCCI President, the newly inserted Section 175C authorises the FBR to appoint its officer in any business premises to monitor production, services, and stockan act considered as a direct breach of business confidentiality and a blatant intrusion into private enterprise. Furthermore, amendments to the Federal Excise Act have criminalised the use of fake stamps, barcodes, or labels, tightening the grip on businesses. Granting powers of checking and confiscation to other departments could undermine the constitutional jurisdiction of central authorities.
