KARACHI: Zakaria Usman, President, Federation of Pakistan Chambers of Commerce and Industry (FPCCI) and ECO CCI on Monday said the government can earn more revenue from income tax on rentals income by adopting a uniform rate of 10 percent income tax rather to put the tax payers in different tax slabs and complex calculations of income tax on rentals.
He said that different slabs introduced during budget 2013-14 should be abolished because these slabs have opened a window for mis-declaration, corruption and tax evasion. The landlords keep fake receipts to evade the actual rental income to avoid payment of income tax as per actual slab.
While sharing his views about the tax collection he said: “tax cannot be collected by force, the public would like to pay taxes without fear if rates and policies of taxes are rationalized and the tax payer should not be indulged into unnecessary record keeping and complex calculations.” The government should adopt soft policies for collection of revenues through different taxes, he urged.
He further said that due abrupt increase in the tax on rental income from 10 percent to 24 percent approximately the rentals of the warehouses have been increased manifold. The government is well aware about the fact that there is acute shortage of warehouses in Pakistan.
The businessmen and traders have to get the warehouses on rent to procure and store their goods/stuff. In view of the increased rate of income tax, the landlords of the warehouses have enhanced the rent due to which the cost of doing business is automatically increased and ultimately the end consumer has to bear this cost.
Zakara Usman further said that FPCCI in its pre-budget proposals has already urged the FBR to reduce and fix the tax rate on rental income at a uniform rate of 10 percent with full and final settlement of tax liability. “This will incentivize and encourage the tax payers to pay their tax liability honestly and willingly without fear,” he added.
The mechanism of low tax rates will enable the government to broaden the tax net with new tax payers.