Pakistani TV Game shows which are telecasted on all entertainment Channels now a days are emerging as ‘tax heaven’ for large business corporations. Reportedly millions rupees of taxes are being evaded. Several Business Corporations are distributing expensive gifts in the television game shows which include cars, gold, bikes, laptops, home appliances, tablet PCs and smart phones against very easy and simple questions. Combined volume of these gifts which are given away in every episode of every game show is quite hefty. The volume increases multiple times during the festive and religious occasions.
Huge amount of money is being put by corporations into such game shows in the form of gifts which is a bit alarming, according to the sources the corporations are exploiting the giveaways for their own benefit. Corporations in the name of Game Shows are manipulating their financial records to help them evade millions of rupees of taxes. As a matter of fact the Income Tax Ordinance 2001 provides the registered businesses and corporations with the facility to deduct the expenses the corporations incurred on Promotions and Sales from the Income Tax. Section 20 of the Income Tax Ordinance 2001 provides the exemption to the corporations.
[alert style=”white”] Whereas Section 156 of The Ordinance allows to deduct the Income Tax on the gifts/Prizes at the rate of 20% under the final tax regime. [/alert]
Section 156 further elaborates the matter and emphasize that the prize giver shall collect the Income Tax. Despite clear directions provided by the Income Tax Ordinance the real situation seems quiet vague. The Federal Board of Revenue (FBR) till now has not drafted any mechanism which will facilitate FBR to monitor the tax collection on the gifts/prizes been given away in game shows.
As the tax collection is a matter which is totally in hand of the corporations, the sources claim that the business corporations were showing an increase in promotion and sales expense instead of categorizing it as prizes/gifts/giveaways in this way the corporations are evading taxes.
[alert style=”white”] The absence of proper monitoring of the game shows by FBR is the reason the FBR is not in the position to evaluate the prizes being given away. [/alert]
This mistake or improper management of the situation is providing the firms to exploit the ordinance and giving away of prizes in their own favor resulting in tax evasion of millions of rupees.