ISLAMABAD: Tarin hints at capital gains tax on real estate

The Prime Minister’s Adviser on Finance Shaukat Tarin has hinted at the imposition of capital gains tax on real estate deals and indirect taxes on the service sector in the next budget.

Talking to Dawn, Mr Tarin said there was no justification for not taxing capital gains on real estate and service sector.

The government, he said, was exploring all avenues to expand the tax base and all people who should pay tax but were not doing so would be brought into the net.

He said there were tax laws for certain areas but people were not following them and there were people who had tax registration but they were not filing returns.

Talking about a proposal for capital gains tax on shares, Mr Tarin said the government had promised to spare stock markets till 2010, but after that talks would be held with the management of bourses.

Answering a question about tax on agricultural income, he said taxing low-price crops would not yield results because farming had been a neglected sector for a long time.

‘First we will have to develop agriculture as a profitable business. Once we do that in a couple of years then the agriculture income will also be brought under tax net,’ Mr Tarin said.

The adviser said that by the end of the current financial year the government borrowing would not exceed the Rs258 billion limit agreed with the International Monetary Fund. Currently it was about Rs206 billion.

Commenting on a rift between income tax and customs departments of the Federal Board of Revenue since the establishment of Inland Revenue Service, Mr Tarin said people resisted change.

He said combining sales tax service with income tax was a step in right direction. This would facilitate taxpayers and the government was committed to it. ‘We will try to convince those resisting it and will address their concerns. I know there are a few people who are creating trouble and we will deal with them.’

The adviser said the government had planned to undertake major tax reforms to improve tax-to-GDP ratio, expand tax base, increase tax compliance and make tax administration more efficient.

The government is moving towards a taxation system based on moderate rates and wider base through rationalisation of exemptions.

Mr Tarin said the FBR was conducting tax audit of firms which had filed tax returns but did not get them audited for many years

Source: The Dawn