ISLAMABAD: The Senate Standing Committee on Finance has delayed a key budgetary proposal for 2024-25, which aimed to extend tax exemptions for the erstwhile tribal areas until June 30, 2025.
Federal Board of Revenue (FBR) Chairman informed the Senate committee that despite a detailed discussion in the budget cabinet meeting, the federal cabinet rejected the FBR’s recommendation to withdraw the time-bound tax exemption for the tribal areas. These exemptions were originally granted to industrial units in sectors like iron/steel, plastics, ghee, and textiles located in the former Federally Administered Tribal Areas (FATA) and Provincially Administered Tribal Areas (PATA).
Initially, a five-year tax exemption from income and withholding taxes was given to FATA/PATA from July 1, 2018, to June 30, 2023, which was then extended for one more year until June 30, 2024. The proposal now is to extend this exemption for another year until June 30, 2025.
The Senate Standing Committee on Finance and Revenue met for its 5th session to closely examine the Income Tax Ordinance, 2001, as detailed in Clause 6 of the Finance Bill 2024. The meeting, chaired by Senator Saleem Mandviwalla, included participants such as Senators Sherry Rehman, Mohsin Aziz, Anusha Rahman Ahmad Khan, and others, along with the FBR Chairman and representatives from relevant departments.
Key points discussed included the introduction of a new category called “Late Filer” under the Income Tax Ordinance, aimed at individuals who file returns inconsistently. The committee proposed stricter penalties, including a 10% tax levy and the withdrawal of previous concessions.
Clarifications were made regarding the misunderstanding about linking NTN numbers with passports for international travel, with Chairman FBR clarifying that this requirement will only apply after due notice and inclusion in the income tax general order.
The committee also reviewed amendments for taxing capital asset transactions, extending the carry-forward period for business losses, and introducing 100% tax credits for coal mining projects in Sindh, suggesting similar benefits be extended to other provinces.
Advertising expenses related to brand royalties were discussed, with the committee expressing reservations about proposed clauses affecting local investors and ownership control thresholds.
Regarding income tax on imports, the committee members were surprised by the proposed methods for determining minimum taxable values and advocated for using customs evaluations as the standard practice. They deferred this amendment for further review along with sales tax amendments.
Previous decisions included revising tax slabs, rejecting a proposed capital gains tax on property, and endorsing withholding taxes on phone and internet services for non-filers.
