Banks asked to provide cash withdrawal details of over Rs5 million

KARACHI: The Large Taxpayers Units (LTUs) have asked banks to provide details of persons who withdrew Rs5 million in cash and above during the last two fiscal years in order to check undocumented money, official sources said on Tuesday.
Sources at the LTU Karachi said the directorate of broadening of tax base, Federal Board of Revenue (FBR) had issued instructions to all the three LTUs to collect information from banks as huge transactions were made during the last two fiscal years.
As per the FBR’s year book, the collection of withholding tax on cash withdrawal posted 53 percent growth to Rs19.3 billion during the fiscal year 2013/14 as compared to Rs12.44 billion collected in the preceding fiscal year. The significant increase can be attributed to withholding tax rate on cash withdrawal from 0.2 percent in 2012/13 to 0.3 percent in 2013/14. On work-back basis, the banking companies paid Rs6.33 trillion in cash during 2013/14 at 0.3 percent and Rs6.25 trillion at 0.2 percent in the preceding fiscal year, the sources said.
Sources in the revenue authority said such a huge amount reflected undocumented economy and to tap this potential at concessionary tax rate, the revenue body would be able to collect additional billions of rupees.
The sources said the directorate was seeking the data to identify persons who were not in the tax net and making businesses or transactions such as property purchase, payment for vehicle and air travel.
The LTUs have asked the banks to provide details such as name and address of the tax deductee of cash withdrawal / sale of instrument against cash under sections 231A and 231AA of the Income Tax Ordinance, 2001; CNIC of tax deductee; NTN of tax deductee (if available); amount of cash withdrawal / sale of instrument against cash; and amount of tax under Section 231A/231AA.
Obtaining details from the banks was always a thorny issue for the FBR; however, approval of Section 165A of the Income Tax Ordinance and clearance from the court the tax departments are now able to get details.
Recently, the FBR Head Office had also sent letters, informing about the changes in the law regarding accessing the bank accounts.
In the past, the banks were continuously refusing the FBR demand on the plea that secrecy laws restrict sharing information about the accountholders.
The LTUs have been asked to send the details of cash withdrawal by Jan 18 in order to screen the potential taxpayers. In the last budget, the government introduced higher rate for non-filers, and 0.5 percent imposed as withholding tax on cash withdrawal by non-filers. However, it remained 0.3 percent who provided evidence of filing last tax year return.