ISLAMABAD: The federal government has declined to share income tax returns with provincial authorities due to concerns over confidentiality, amid ongoing disagreements between the Punjab government and the Centre over taxing livestock income.
The refusal to provide access to taxpayer data comes as the federal government is proposing an amendment to allow private auditors and commercial banks access to income tax information. This issue was discussed during a recent meeting of the National Tax Council (NTC), chaired by Finance Minister Muhammad Aurangzeb.
According to government sources, the meeting emphasized the need for mutual data sharing between the federal and provincial governments. However, the NTC pointed out that Section 216 of the Income Tax Ordinance (ITO) prohibits sharing of taxpayer data with external parties. Despite this, the Federal Board of Revenue (FBR) expressed willingness to share specific data related to agricultural and property income with the provinces, which fall within their jurisdiction.
FBR Chairman Rashid Langrial assured that the board would review provincial requests for data relevant to their tax collection and revenue generation needs. A major concern raised during the meeting was the practice of declaring non-agricultural income as agricultural income to evade taxes, especially by those with significant landholdings engaged in multiple businesses. The International Monetary Fund (IMF) has urged Pakistan to align agricultural income tax rates with federal personal income tax rates, as the current maximum agricultural tax rate of 15% contrasts with the federal rate of up to 50%.
Additionally, the federal government proposed amending Section 216 of the ITO to grant commercial banks and private auditors access to taxpayer data. This proposal is part of the Tax Laws Amendment Bill currently before the National Assembly.
The meeting also touched on ongoing disagreements over livestock taxation between Punjab and the federal government. While the Centre maintains that livestock income is a federal subject, Punjab has included livestock in its new agriculture tax law, passed last month under IMF conditions. The matter was referred to the executive committee for further deliberation.
Another key issue discussed was the standardization of property tax valuation methods across provinces. There was consensus among stakeholders on the need for a unified approach to property taxation, with an emphasis on digitizing property records to ensure consistency and reduce compliance costs. The executive committee was tasked with reviewing property tax methodologies and making recommendations for a common framework.
The discussions reflect the ongoing challenges in harmonizing federal and provincial tax policies and ensuring compliance with international financial obligations.
