UNISAME concerned at harsh levy and more taxes on dividendsJune 15, 2015
KARACHI: The Union of Small and Medium Enterprises (UNISAME) invited the attention of the prime minister (PM) Mian Nawaz Sharif to the harsh levy of 0.6% and higher rate of taxes on dividends and profit on savings for the non filers and urged him to intervene and remove the discrimination in the budget between filers and non filers as taxes are paid by the under privileged and others in different manners and the government cannot punish them as non filers.
President UNISAME Zulfikar Thaver said the approach of the ministry of finance towards the issue is irrational and even questioned the legality of the discrimination. This is unfair and uncalled for and reflects the inability of the Federal Board of Revenue (FBR) in not being able to trace the non filers whose income is taxable and yet they are not filing returns and prefer to remain non filers by choice. By this system of collecting the extra tax from them as non filers the FBR is legalizing them whereas it is penalizing the under privileged sector as non filers whose income is below the taxable limit.
The FBR needs to distinguish between those who wish to file their returns but are avoiding due to fear or lack the inability to file returns due to lack of education and those who are not inclined to file returns although earning huge income from different sources with their undisclosed money. A line is to be drawn between them and the under privileged class who are willing but not facilitated to file returns easily. The income tax return forms are cumbersome and the online system needs to be improved and made efficient.
He said the tax exemption limit is Rs 400000 and obviously those whose income is below Rs 400000 are not required to file returns and the banks will apply the 0.6% withholding tax (WT) on them as well for all banking transactions. Secondly he said agricultural income is also non taxable and as such the farmers deriving their income from agriculture only are not required to file returns by virtue of the exemption and they will also be subjected to 0.6% WT on bank transactions.
Thirdly Thaver said the system of WT has not spared anybody and for that matter even the under privileged are paying taxes on mobile phones and purchases made by them and labelling them as non filers and treating them in this manner is indeed harsh and not expected from an MSME friendly government.
The upper class non filers will not be bothered by the 0.6% WT or the extra WT on dividends or profit on deposits and saving accounts but the MSMES are the ones who will be affected by this defective law discriminating between tax payers and subjecting tax payers to this harsh treatment. The union has suggested that instead the government should simplify the income tax return form and encourage the non filers to file their returns and also educate the non filers to file their returns.
However those whose income is below the exemption limit or those deriving their income from agriculture are not supposed to file returns and the government should take cognizance of the fact and inform the banks to treat them accordingly.
Due to political considerations income from agriculture still remains exempted but the under privileged class is being subjected to this discrimination between filers and non filers although the non filers are also paying taxes under different heads on a daily basis as the taxes envelope almost every requirement of the people. However UNISAME appreciated the relief to the micro and small sector by reducing the rate of tax to 2% on income between Rs 400000 to Rs 500000.