Budget 2014-15: Essential tax reforms – I

“If we want lower taxes for growth, then spending must be curtailed so that governments won’t need so much money. The next time you hear a politician promise another tax break for some special group of taxpayers, think how much that hurts the economy and you as a taxpayer. It’s time to simplify the system and reduce its onerous impact that undermines economic growth” – Jack M. Mintz, the Palmer Chair of Public Policy, School of Public Policy, University of Calgary, Canada

For any meaningful change in existing ailing tax system, solutions have to be found for those issues that have been side-tracked for years. The most essential issue is revival of circle system as the existing functional one has not only failed miserably, it has rendered the Federal Board of Revenue (FBR) a non-functional organisation. The other very impressing issue is lack of effective personal taxation due to overwhelming presumptive taxes, minimum taxes, unjust tax brackets and numerous exemptions. Unfairness of the system is obvious that it is not even indexed with inflation. This article will concentrate on these two issues alone. The other important ones will be discussed in the forthcoming articles, written exclusively for the forthcoming budget 2014-15.

On the eve of each year’s budget exercise, many vital issues are raised by experts, but ignored by FBR for reasons best known to it eg issue of restoration of circle system was raised way back in 2008 in these columns and then repeated many a times, but never considered by the policymakers. On income taxation, the policy of appeasement, despite vehement opposition from many quarters, is prevailing and perpetuating. Giving tax amnesties, increasing exemption limits, raising deductions, lowering tax brackets and serving the rich and mighty through statutory regulatory orders (SROs) has eroded income tax base substantially. The following, if considered, in the forthcoming budget, can bring a meaningful change in tax administration.

ADMINISTRATIVE REFORMS – FAILURE OF FUNCTIONAL SYSTEM The administration of a tax system is a complex issue. No doubt, a proper input from FBR is vital for making the system successful but it is equally necessary to take all the stakeholders on board. On the issue of revival of circle system in Inland Revenue Service (IRS), wide support is available now-many tax bars and trade bodies have supported it recently. In fact, there is hardly any difference of opinion on this issue in the wake of complete failure of functional system. Unfortunately, this issue, which deserved utmost priority, was neglected by all the tax reform or advisory committees constituted in the past by FBR. The recently-notified advisory committee must treat revival of circle system as the important issue deserving full-scale attention.

The undeniable reality is that no agenda for rationalisation or simplification of tax reforms can substantially improve tax compliance, unless there is a substantial improvement in public perception regarding the efficiency, technical competence, integrity and ability of the tax authorities to relentlessly pursue and punish tax evaders without any political and other interference. The present functional structure in IRS has failed to achieve these objectives. There is always talk of giving “market” wages, but nobody has ever thought of improving the overall working conditions of FBR and professional skills of officers and staff. If one goes to a tax office as a taxpayer only then one would feel the taste of inhuman and insulting treatment, an ordinary citizen receives daily. Does it really need enormous money to extend respect and courtesy to taxpayers they deserve? Does this issue relate to market wages or foreign funding or advice?

The exercise relating to tax reforms cannot be a time-bound affair and does not mean merely making changes in law. Reforms can be successful only if simultaneous analysis is made of the whole system, that is, tax structure, tax administration, state of economy, taxpayers’ attitude, revenue needs of the country and so many other allied aspects. Measures that are necessary to make a tax system successful relate to: –

1. devising and running an efficient and truly independent justice system;

2. provision of expert legal advice for drafting of laws;

3. designing of tax forms and procedures;

4. improvements in the management of tax department;

5. a broad-based personnel policy;

6. training of tax administrators, especially for under-cover operations;

7. educating the taxpayers and making them realise that it is their moral duty to pay tax;

8. development of work ethics;

9. provision of healthy working conditions; and

10. efficient redressal machinery for the problems of taxpayers.

CHANGE IN INCOME TAX REGIME It is an inescapable conclusion that income tax law, as it exists, is a most undesirable piece of legislation. Direct tax system intends to achieve the twin aims of maximising revenue as well as utilising revenue for achieving socio-economic objectives. In actual practice, our tax system has failed to achieve either of these objectives. In fact, the complex regime of incentives and disincentives built into the direct tax law cannot but lead, per se, to difficulties in enforcement and to the opening of opportunities for tax-dodgers/evaders. Undoubtedly, the time has come to resolve these contradictions and to completely convert direct tax regime into simple tax law.

BROADENING TAX NET FBR has been running after small fry to broaden the tax net. For example, a person with a car, telephone etc has to file a return whether he has taxable income or not. Such an exercise generates tremendous infructuous, unproductive and wasteful workload without any significant gain to the revenue. It strengthens the feeling that the government, unable to tackle the hardened tax evaders (for example sharks at stock exchanges who engulf small investors), is unduly harsh on salary and wage earners. A feeling goes around that they are made to bear the major burden of taxes. The consequence is that ordinary people who generally think of themselves as honourable and honest end up in participating or advising others to practice evasion of taxes!

In order to initiate a public debate, below is a draft of proposed ‘Income Tax Act, 2014’. A meaningful public debate on this draft can pave the way for better income tax legislation in the country. However, it all depends on the attitude of the elected members, who hardly take any interest in enacting such laws that can make a difference in the lives of ordinary people. They openly defy tax laws – see Tax Directory published by FBR recently. They are not ready to part away some part of their colossal incomes. They are keener to safeguard their vested interests and keep on accumulating more wealth as money power is what ensures them to remain in power. Therefore, personal taxation has become an important issue in Pakistan. With only 840,000 filing tax returns this year, Pakistan now represents a case of total tax revolt. Non-compliance of income tax law by the legislators, politicians, military-civil hierarchy, powerful business houses and traders is highly lamentable. In this scenario, we need to ensure strict compliance of income tax obligations, but first of all must introduce a simple and growth-oriented legislation so that there is inclination for voluntary compliance. The draft proposed below can achieve this purpose.

There are considerable chances that the government would avoid any such legislation. It would certainly harm the interests of the classes represented by the ruling party. However, one hopes that even if government ignores it, some member(s) of Opposition may get inspired and opt to present it as a private member’s bill in the House before the forthcoming budget – 2014-15. It can generate meaningful debate in the Parliament and public. Progressive income taxation is at the heart of establishing a true social democracy, which we lack. Complex laws and cumbersome procedures give unbridled powers and discretion to tax authorities and these should be discarded if we want real and meaningful tax reforms. It is now the duty of elected members to take initiative and enact fiscal laws through consultative process as ordained by the Supreme Court in CIT v Eily Lilly & Others 2009 PTR 23 [Supreme Court] as under:

“Since the creation of Pakistan we have not been able to frame any Income Tax Act duly debated in the Assembly. Both the Ordinances were promulgated during the Martial Law Regime otherwise the Constitution has prescribed a four month life of an Ordinance in case the Ordinance is not be placed before the Assembly and it shall be enacted as an Act then the Ordinance will automatically cease to exist. This aspect also reveals that the Constitution has cast duty upon the legislative body to frame the laws within the parameters prescribed under the scheme of the Constitution”… The fact that the Ordinance in question was issued and various amendments were incorporated before and even after the enforcement of the Ordinance 2001 raises the controversy that the Ordinance in question was promulgated without meticulous debate on the subject due to which assessees and concerned departments were compelled to agitate the issues in different courts.”

SALIENT FEATURES OF THE PROPOSED INCOME TAX ACT

I. INTEGRATION OF ALL COMPONENTS

There are four authorities responsible for enactment and implementation of taxes on income, Parliament, Federal Government, Federal Board of Revenue and the Inland Revenue Authorities. The role of each one of them should be clearly defined.

II. NO DELEGATED POWERS There should be no delegation of power to any administrative authority in fiscal law, except to make rules. The notorious SRO system should be disbanded completely as it is against Article 162 of the Constitution of Pakistan.

III. TAX RATES SHOULD NOT BE SUBJECT TO ANNUAL FINANCE BILL Income tax Rates should be at least for five years so that people can make long-term planning of their affairs. The base of income and the range of tax rates should be made adequately wider so that there is no need to change it every year. The progressivity of the tax rates is essential to meet the constitutional requirement of ensuring economic justice and social disparities. Tax rates should also be rationalized in order to make them equitable for all classes of persons.

IV. TAX ON UNDISCLOSED INCOME The tax on undisclosed income must not be charged by clubbing it with the declared income. It should be taxed separately at a fixed rate. However, it is proposed to have a National Deposit Account in which any amount can be deposited without giving explanation for its source. No money can be withdrawn from it for 3 years and it would not carry any interest either. Thereafter, when money is withdrawn the same shall become taxable in that year.

V. INCOME FROM CAPITAL GAINS AND LONG-TERM SOURCES Income from capital gains and other long-term sources should be separately taxed. It should be delinked from the taxation of annual income.

VI. DISTRIBUTION OF INCOME WITHIN A FAMILY In respect of deductions, a minimum 20% of the income, if transferred to members of taxpayer’s family, must be exempted. It can be made taxable in the hands of the members of the family. This will provide for faster and equitable distribution of wealth amongst the members of the family and greater family stability in the society.

VII. PENALTY AND PROSECUTION Penalty and prosecution provisions must continue and the income tax authorities should be given wider powers to enforce the provisions of law. No degree of liberalisation or reduction in the rates of tax can take away the lure of not paying taxes. Tax is like any other expenditure and every one would like to save the maximum on this.

VIII. PAYMENT OF TAX The entire amount of tax should be made payable by the assessee either by deduction at source or by advance payment of tax before the end of the year. The base for deduction of tax at source may be made very wide but option must be given to the assessee to declare that his income is below the taxable level to receive income without any deduction of tax. Penalty and prosecution provisions can be strengthened against giving a false declaration.

IX. NATIONAL COURT OF FEDERAL TAXES There may be a National Court of Federal Taxes subordinate only to the Supreme Court. It should be the final authority as regards the interpretation of all federal tax laws. It should only refer important questions of law to the Supreme Court. This would relieve the High Courts of very heavy burden of tax cases.

X. RULES OF INTERPRETATION The Act should contain the rules for interpretation of the statutes. Much of tax litigation has arisen because of different rules of interpretation being applied by different authorities and by the same authorities at different times. The rules of interpretation of tax laws should be applied uniformly and decisively.

DRAFT INCOME TAX ACT, 2014

CHAPTER I

PRELIMINARY

Part 1 – Enactment

1. (1) This Act may be called the Income Tax Act, 2014.

(2) It extends to the whole of Pakistan.

(3) Save as otherwise provided in this Act, it shall come into force on the 1st July 2014 or any later date notified by the Federal Government.

(4) The Income Tax Ordinance, 2001 is hereby repealed.

(5) If any difficulty arises in giving effect to the provisions of this Act, the Federal Government may, by general or special order, do anything not inconsistent with such provisions which appear to be necessary or expedient for the purpose of removing the difficulty.

(6) The Federal Government shall cause every Rule made and every notification or circular issued under the Act to be sent to the Parliament Secretariats within one month of its issue.

(7) Where both Houses of Parliament agree in making any modification in the Rule, circular or notification or both the Houses agree that the Rule, circular or notification should not be made or issued, the Rule, circular or the notification shall thereafter have effect only in such modified form or be of no effect, as the case may be, so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under the Rule, circular or notification.

(8) No suit shall be brought in any civil court to set aside or modify any proceeding taken or order made under this Act, and no prosecution, suit or other proceedings shall lie against the Government or any officer of the Government for anything done in good faith or intended to be done under this Act.

PART 2 – DEFINITIONS

2. In this Act, unless the context otherwise requires-

(1) “agricultural income” means agricultural income as defined below:

(a) any rent or revenue derived from land which is situated in Pakistan and is used for agricultural purposes;

(b) any income derived from such land by-

(i) agriculture; or

(ii) the performance by a cultivator or receiver of rent-in-kind of any process ordinarily employed by a cultivator or receiver of rent-in-kind to render the produce raised or received by him fit to be taken to market; or

(iii) the sale by a cultivator or receiver of rent-in-kind of the produce raised or received by him, in respect of which no process has been performed other than a process of the nature described in paragraph (ii);

(c) any income derived from any building owned and occupied by the receiver of the rent or revenue of any such land, or occupied by the cultivator, or the receiver of rent-in-kind, of any land with respect to which, or the produce of which, any operation mentioned in paragraphs (ii) and (iii) of sub-clause (b) is carried on:

Provided that the building is on, or in the immediate vicinity of, the land, and is a building which the receiver of the rent or revenue or the cultivator, or the receiver of the rent-in-kind by reason of his connection with the land, requires as a dwelling-house, or as a store-house, or other out-building;

(2) “amalgamation”, “company”, “director”, “dividend”, “manager”, “managing agent”, “principal officer” and “public sector company” have the meanings respectively assigned to them in the Companies Ordinance, 1984;

(3) “assessee” means a person in whose name a proceeding under the Act has been initiated or is intended to be initiated;

(4) “Taxation Officer” means any authority who is vested with the relevant jurisdiction under the Act;

(5) “average income-tax rate” means the rate arrived at by dividing the amount of income-tax on Gross Annual Income as per the rates in the First Schedule by such Gross Annual Income;

(6) “Board” means the Federal Board of Revenue established under the Federal Board of Revenue Act, 2007 (Act No IV of 2007);

(7) “business” includes any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture;

(8) “capital asset” means property of any kind except-

(a) stock-in-trade, consumable stores or raw materials held for the purposes of business or profession,

(b) movable property excluding jewellery held by an individual or a Hindu Undivided Family, and

(9) “charitable purpose” and “charity” shall have the meaning assigned to them in the Trust Act of 1882;

(10) “co-operative society” means a co-operative society registered under the Co-operative Societies Act, 1912 (XI of 1912), or under any other law for the time being in force in any Province for the registration of co-operative societies;

(11) “fair market value” of an asset means the price that the asset would fetch if sold in the open market on the relevant date;

(12) “firm”, “partner” and “partnership” shall have the meanings respectively assigned to it in the Partnership Act, 1932 (IX of 1932);

(13) “income” includes any receipt in cash or in kind or by settlement through account, whether due or not, which is assessable under the Act and shall include

(a) gifts received,

(b) value of any assets received by way of inheritance or under will or on death of any person in any manner, which exceeds Rs one million, and

(c) goodwill;

(14) “legal representative” shall have the meaning assigned to it in clause (11) of section 2 of the Code of Civil Procedure 1908 (V of 1908);

(15) “non-resident person” shall be one as defined in the Foreign Exchange Regulation Act of 1947 and as a person who is not a non-resident shall be treated as a resident person;

(16) “person” includes –

(a) an individual,

(b) a Hindu Undivided Family,

(c) a company,

(d) a firm,

(e) an association of persons or a body of individuals, whether incorporated or not,

(f) a local authority,

(g) every artificial juridical person, not falling within any of the preceding sub-clauses, and

(h) federal government, provincial government or any person, body or institution, responsible for paying any sum under the Act;

(17) “prescribed” means prescribed by the Board;

(18) “profession” includes vocation;

(19) “public servant” has the same meaning as given in section 21 of the Pakistan Penal Code (XLV of 1860);

(20) “transfer” has the same meaning as given in the Transfer of Property Act, 1882 (IV of 1882) and shall include –

(a) the transfer of a capital asset by a person to a firm or association of persons or body of individuals in which he is or becomes a partner or member, by way of capital contribution or otherwise and

(b) the transfer of a capital asset by way of distribution of capital assets on the dissolution of a firm or association of persons or body of individuals;

(21) “year”, save as otherwise provided in any provision of this Act, means the financial year, and where a business or profession is newly set up, or a source of income newly comes into existence on a date within the said financial year, the year shall be the period beginning with that date and ending with the financial year or earlier.

PART 3 – ADMINISTRATION

3. (1) The Federal Government shall constitute a Federal Board of Revenue consisting of a Chairman and Members required from time to time to implement this Act.

(2) The Board shall exercise such powers and perform such duties as may be entrusted to the Board by or under any law subject to the control of the Federal Government.

(3) All decisions of the Board shall have the consent of at least three Members of the Board (including the Chairman).

4. (1) The Board shall have the following classes of tax authorities under its control and management for the purposes of the Act:

(a) Chief Commissioner Inland Revenue,

(b) Commissioner of Inland Revenue,

(c) Additional Commissioner Inland Revenue,

(d) Deputy Commissioner Inland Revenue,

(e) Assistant Commissioner Inland Revenue,

(f) Taxation Officer,

(g) Inspector.

(2) The Federal Government shall appoint as many of the Inland Revenue authorities mentioned in clause (1) as may be necessary for the purposes of the Act.

5. Subject to the rules and orders of the Federal Government regulating the conditions of service of persons in public services and posts, the Board itself or by authorising the Chief Commissioner in this behalf, may appoint such executive or ministerial staff as may be necessary to assist the Inland Revenue authorities in the execution of their functions.

6. The Board may issue orders, instructions and directions, without interfering with the judicial discretion of an appellate authority, to any tax authority for the following purposes and all such orders, instructions and directions shall be binding on all such authorities –

(1) Relaxation of any provision contained in Chapters 4 and 6 of the Act in respect of any class of incomes or class of cases, which, in the opinion of the Board, is necessary in the public interest;

(2) Admission of an application or claim for any exemption, deduction, refund or any other relief under the Act after expiry of the specified period to avoid genuine hardship in any case; and

(3) Proper administration of the Act including the regulation and control of the procedure for implementing the provisions of Chapters 5, 7, 8 and 9.

7. (1) The Board shall assign jurisdiction to the inland revenue authorities, and may also authorise other authorities to assign such jurisdiction to such other authorities as it may deem proper, to exercise all or any of the powers and to perform all or any of the functions under the Act, control and manage the authorities and the staff,.

(2) Any case or any proceeding under any provision of the Act in respect of a case shall be transferred from one Officer to another as prescribed by the Board provided that, where, it is sought to be transferred not at the option of the assessee, the assessee shall be given a reasonable opportunity of being heard in the matter and the reasons for doing so shall be recorded by the authority transferring the case.

8. Whenever in respect of any proceeding under the Act an authority ceases to exercise jurisdiction and is succeeded by another who has the jurisdiction, the authority so succeeding may continue the proceeding from the stage at which the proceeding was left by the predecessor:

Provided that the assessee concerned may demand that before the proceeding is so continued, the previous proceeding or any part thereof is reopened or that before any order is passed against him, he is reheard.

PART 4 – GENERAL

9. Every person in respect of whom proceeding under any provision of the Act has been initiated or who is required to have a National Tax Number (NTN) under any notification issued by the Board in this behalf, and who has not been allotted such a number shall, within one month of the initiation of the proceeding or issue of the notification, as the case may be, apply in the prescribed manner to the Taxation Officer for the allotment of the number.

10. Every person, who has been allotted a National Tax Number shall –

(1) quote such number in all his returns to, or correspondence with any inland revenue authority;

(2) quote such number in all challans for the payment of any sum due under this Act; and

(3) quote such number in all documents pertaining to such transactions as may be prescribed by the Board.

11. Every person shall intimate to the Taxation Officer any change in his address or in the name or nature of his business or any changes in the constitution, succession or dissolution of a firm or a company.

12. A notice or requisition under this Act may be served on a person as provided under the Code of Civil Procedure, 1908 (V of 1908) by an Inland Revenue authority for –

(1) enforcing attendance;

(2) examination on oath;

(3) producing books of accounts or any other document; and

(4) issuing commissions.

13. Where a notice or requisition under section 12 has been issued to a person, the powers available to a court as provided in Chapter VI of the Code of Criminal Procedure shall be available to the inland revenue authority to compel appearance.

14. Any assessee who is required to appear before any inland revenue authority under any proceeding under the Act except under section 12 may appear through an authorised representative as prescribed by the Board.

CHAPTER 2

CHARGE OF INCOME TAX

Part 1 – General Rate of Income tax

15. Save as otherwise provided in any other provision of the Act, income tax in respect of the Net Annual Income of every person shall be charged at the rate prescribed in the First Schedule of the Act.

16. Income tax in respect of the Net Annual Income of a firm, or an association of persons, or a body of individuals, whether incorporated or not, where the individual shares of the partners or the members, as the case may be, in the whole or any part of income, are indeterminate or unknown, shall be charged at the rate of 30 percent of the Net Annual Income.

17. Where the person is in receipt of any income on which no income tax is payable as mentioned in Part 3 or any income on which special rates of income tax as mentioned in Part 4 of this Chapter are applicable, income tax to be charged shall be computed at average income tax rate on the Net Annual Income.

18. Income tax in respect of income from long-term sources as provided in Part 6 of Chapter 3 of the Act should be charged in the following manner:

(1) Number of years for which the asset was held or the source of income was in existence, assuming part of a year as one year, shall first be determined.

(2) Income from the long-term source as assessed shall be divided by such number of years.

(3) Income tax to be charged shall be the sum of income tax calculated on the amount arrived at in clause (2) at the rates prescribed in the First Schedule multiplied by the number of years arrived at in clause (1) in respect of each of such long-term sources.

19. Where any relief of tax is granted or avoidance of double taxation is provided for under Part 5, the provisions of this Act shall apply to the extent they are beneficial to the assessee.

PART 2 – PERSONS WHOSE INCOME IS EXEMPTED FROM INCOME TAX

20. Income of a company wholly owned by the Federal Government shall be exempted from income tax.

21. Income of an authority, institution or body created under an Act of the Parliament shall be exempted from income tax if so provided under that Act.

22. Income of an institution, association or body existing solely for one or more of the following purposes and not for purposes of profit and created or recognised as such by the Federal Government shall be exempted from income tax:

(1) scientific research,

(2) education,

(3) medical service,

(4) collection and distribution of news,

(5) promotion of sports,

(6) promotion and regulation of a legal business or profession,

(7) development of village industries,

(8) administration of any public, charitable or religious trust or institution,

(9) national relief,

(10) promotion of Pakistani culture and arts,

(11) promotion of co-operative institutions, and

(12) economic development of backward communities of Pakistan.

23. Income or voluntary contributions received or due to be received by any trust, institution or body registered under any Act of the Federal or a Province and existing solely for charitable purposes and not for purposes of any profit shall be exempted from income tax subject to the following conditions –

(1) at least 80 percent of such receipts during the year shall be spent for the charitable purposes during that year,

(2) money remaining in balance may be deposited in an account notified by the Federal Government,

(3) no benefit accrues directly or indirectly to the author of the trust or to the founder of the institution or to any of the trustees or managers or to any person who has contributed ten thousand rupees or more or to any of the relatives of such persons, and

(4) at least 20 percent of the voting power in the management or administration of the trust or body shall vest in the nominees of the Federal Government.

24. Income of a political party recognised by the Election Commission of Pakistan shall be exempted from income tax subject to the following conditions –

(1) the party maintains proper books of accounts as prescribed;

(2) it keeps a record of names and addresses of the persons giving contribution; and

(3) the accounts are audited by a Chartered Accountant.

PART 3 – INCOME ON WHICH NO INCOME TAX IS PAYABLE

25. Income tax shall not be payable on any income falling within any of the following clauses:

(1) agricultural income;

(2) dividend;

(3) any sum received by an individual as a member of a Hindu Undivided Family, where such sum has been paid out of the income of the family, or, in the case of any impartible estate, where such sum has been paid out of the income of the estate belonging to the family;

(4) share, compensation, salary, bonus, commission or remuneration by whatever name called, due to, or received by partner of a firm from such firm, or a member of an association of persons from such an association;

(5) any income by way of salary payable by the Government of Pakistan in Pakistan or abroad; and

(6) any income exempted by an Act of Parliament.

PART 4 – SPECIAL RATES OF INCOME TAX

26. Income tax in respect of income from profits and gains of any manufacturing concern, may, at the option of the assessee, be calculated at the rate of 5 percent of total sales turnover or gross receipts as the case may be.

27. Income tax shall be charged in the case of non-residents at the rate of 10 percent of gross receipts, in respect of income from –

(1) dividends;

(2) compensation;

(3) units, securities, bonds etc;

(4) royalty or fees for any technical or professional services;

(5) long-term sources; and

(6) ship carrying passengers, livestock, mail or goods shipped at a port in Pakistan, whether the amount is paid or payable in or out of Pakistan.

28. Income tax on income from undisclosed sources shall be charged at the rate of 30% of such income.

29. Income tax in respect of any benefit, perquisite or allowance given in any manner but not in cash, in respect of employment, to the employee or to an associate of the employee or to a third party at the request of the employee or his associate shall be charged, in the case of the employer, at the rate of 20% of the value of such benefit, perquisite or allowance to be computed in the prescribed manner and no tax in this respect shall be payable by the employee.

PART 5 – DOUBLE TAXATION RELIEF

30. The Federal Government may enter into an agreement with the Government of any foreign country –

(1) for the granting of relief in respect of income on which have been paid both income tax under this Act and income tax under that country, or

(2) for the avoidance of double taxation of income under this Act and under the corresponding law in force in that country, or

(3) for exchange of information for the prevention of evasion or avoidance of income tax chargeable under this Act or under the corresponding law in force in that country, or investigation of cases of such evasion or avoidance, or

(4) for recovery of income tax under this Act and under the corresponding law in force in that country, and, may, by notification in the Official Gazette, make such provisions as may be necessary for implementing the agreement.

(To be continued) (The views expressed and proposals made in this article are not necessarily those of the newspaper)