Juncta Juvant of Finance Act 2007

Much has been written in commentaries and said in seminars by the authoritative as the authoritative opinions are to be adduced and regarded in causes – Auctoritates sunt in causis allegandae et tenedae, however, in wordings, it is not the words but the substance and meaning that need to be sought. This article is an endeavor to find out the substance of fiscal laws in economic and accounting terms by correlating different amendments brought by Finance Act, 2007 – Juncta Juvant.

ECONOMIC UPFRONT
The economic upbeat sustained marginally upward for another year irrespective of downward trend in large and small scale manufacturing, livestock and service sector owing to the efficient tactical decisions of our economic managers in line with strategy. SPI showed a downward trend while food inflation has increased many folds and for the first time professionals questioned the integrity of statistics.

From the taxation side, the tax rate has not been reduced which was imperative for broadening the tax base. Although tax neutrality was absent except to some areas like elimination of CVT countered with increase in custom duty but owing to flexibility there are certain things like 1% special excise duty etc may move on positive side accordind to the intention of FBR. Consistency and coherence in tax policy is evident from various amendments like ADRC, period of retention for record keeping, etc, however, there are certain amendments which clearly shows a shift in policy like sales tax mechanism etc. Moreover, transparency is still a mirage except LTU while responsiveness to market failures is evident from the plethora of amendments brought into the bill before conversion into an Act.

Efforts are underway to improve the quality of governance but record trade and current account deficit, human resource, energy crises; high food inflation, high compliance cost and promotion of incentive in manufacturing sector were the new emerging challenges for the present government.

Human Resource
Amendments are made in Workmen’s Compensation Act, 1923 whereby maximum wage limit was removed to qualify as workmen, in West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance, 1968. Now the employer making more than fifty percent contribution to Approved Pension Fund is absolved from payment of Gratuity during such period. In Minimum Wages for unskilled Workers’ Ordinance, 1969 the minimum wage limit is enhanced to Rs4,600.

In furtherance, the scheme of Companies Profit (Workers’ Participation) Act, 1968 is extended to contractual worker, the wage limit is enhanced in all three categories for distribution of benefit to workers and maximum limit of benefit is enhanced to Rs18,400. Moreover, the pension under Employee’s Old Age Benefits Act, 1976 is to be calculated on the basis of last month apart from enhancement of minimum limit to Rs1,500 while the surviving spouse is entitled to pension.