Senate Panel Rejects Tax On Charity Transactions, Exemption For Political Parties

The Senate Standing Committee on Finance has rejected the government’s proposals to tax charity transactions and exemption to political parties in the Finance Bill for the fiscal year 2021-22.

The committee, led by its chairman Senator Talha Mehmood, continued discussion on the finance bill for the fourth day on Friday.

Briefing the meeting, the Federal Board of Revenue (FBR) officials said that an exemption previously given to charitable institutions in the transfer of funds to them has been lifted in the current budget. “The tax will be paid by those giving the charity amount,” the FBR officials said.

The Senate body, however, rejected the imposition of tax on charity amounts. Furthermore, the committee also raised questions on exempting funding to political parties from taxation and rejected the proposal made in the budget, currently in discussion at the Parliament.

Senator Saleem Mandviwalla asked the FBR officials if political parties have asked for exemption in the transfer of funds to them. “We are being asked repeatedly by callers if political parties have sought exemption in this regard,” he said.

The Senate body directed the authorities to take out political parties from the exemption schedule as Mandviwalla said that no political party submits tax returns.

Earlier on Thursday, the committee rejected the government proposals to tax markup on Provident Fund (PF), lowering of benchmark for charging withholding tax on electricity bills and declaration of business account. The committee approved the tax machinery’s proposal to abolish tax exemption on pensions and allowances of government employees.

The committee has also rejected the proposal of withholding tax on non-filers’ electricity bills exceeding Rs25,000 per month. Similarly, the recommendation of tax on mark-up of more than Rs500,000 for PF was also rejected.