Budget proposals 2014-2015: to enhance tax rebate on interest paid on housing financing by 1.5 million

KARACHI: The business industry has suggested the tax officials to enhance maximum tax rebate on interest paid on housing financing to 1.5 million from RS 750, 000 for the taxpayers.
The business industry said that it will help in lowering the burden of building a house for taxpayers.
In the current high inflationary period, building a house has become a huge burden on citizens of Pakistan. Based on the current law, tax rebate on interest paid on housing financing loan is available to taxpayer subject to the lower of: actual amount paid, Rs 750,000 or amount not exceeding 50 percent of taxable income.
It is believed that the high cost of building materials and increased financing; given incentives are not enough anymore.
The business industry has proposed another idea to provide relief to the salaried individuals in form of tax credit in area where expenses incurred on medical and education of children.
It said that the increase in the upper tax slab rates of salaried persons by 50 percent from 20 percent to 30 percent, in the Finance Act 2013-14 have had negative impact on professional managerial talent very much needed to grow the economy.
It is recommended that revision should be downward for the upper slab rate of the salaried class income.
It said that professionally educated and talented individuals will be motivated and brain drain issue will be addressed to a large extent.
The tax credit will be helpful for medical and educational expenses as an incentive for the user of such services in obtaining evidences for payments.
It will turn induce the recipient to be within the documented sector. However, the system had been introduced in the past but due to procedural difficulties and lack of will by the tax authorities, positive results could not be achieved.
It further added that there is a need to incorporate a mechanism that simultaneously encourages documentation and assists in bringing untaxed services sector into tax net.
The business industry has urged the tax machinery to abolish income support levy as the levy has adverse effects on savings and capital formations and diverting funds to the unproductive real estate sector.
It is inequitable because it has been restricted only to individuals who are already within the tax net, thus defeating the purpose of extending the taxpayers’ base.
The imposition of income support levy on individuals was introduced in Finance Act 2013, which taxes a wealth that has already been taxed.

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