KARACHI: The Overseas Investors Chambers of Commerce and industry (OICCI) has advocated that income tax exemption to agricultural sector should be withdrawn as income earners of other sectors are parking their wealth in agriculture pool to avoid taxes.
The chamber suggested that until the exemption is eliminated, agriculturalist should file income tax returns and wealth statements. This will assist in documenting a significant portion of the economy.
It said, accordingly, suitable provisions should be incorporated in the Income Tax Ordinance to enable tax authorities to implement the requirement of filing of income tax returns and wealth statements, effectively.
The OICCI has recommended that all income should be taxed and as a general rule exemptions be given only for attracting foreign direct investment (FDI) and under privilege and poor sections of society or as a motivating factor to encourage the registration of individuals and legal entities.
The chamber of commerce said that the biggest exempted sector is agriculture which does not make any contribution to the national exchequer, despite the fact that 65 percent of Pakistan’s population is directly or indirectly linked with the agricultural sector.
It is believed that the rationale of keeping agricultural out of tax net was to facilitate the small agriculturalists. However, due to non-implementation of land reforms the benefit of the tax exemption is being availed by big landowners earnings huge incomes.
It is mentioned that a new provision section 236G was introduces last year which brings in a couple produce and raw material in to the tax net and recommended that it should be further extended to other sectors of agro-based economy also.
It will ensure a level playing field for all income earners and will significantly improve documentation of productive sectors of the economy.