KARACHI: The Federal Board of Revenue (FBR) on Tuesday sought assistance of the central bank to obtain the details of withholding tax from commercial banks, which are reluctant to provide customer-wise details to the tax machinery.
FBR sources said in this regard, the Large Taxpayers Unit (LTU) Karachi had sent a communication to the State Bank of Pakistan (SBP) for providing records of withholding tax deducted by the banks from non-filers on non-cash transactions.
The sources said it was discovered during recent monitoring of Section 236P of Income Tax Ordinance, 2001 that banks were providing only bulk information of tax deducted and depositing the same to FBR accounts. The banks are required to provide detailed information on monthly basis regarding the customer-wise deduction of withholding tax under Section 236P, which was introduced by the government through Finance Act, 2015 to increase the number of income tax return filers.
The collection of withholding tax was declining gradually throughout the current fiscal year. The collection under this head was at Rs6.74 billion during July-January 2016/2017 as compared with Rs7.06 billion in the corresponding period of the last fiscal year, showing a decline of 4.5 percent. The sources said most of the banks had streamlined the transactions, and the FBR was receiving data online. However, a few banks had not installed such a facility to share the details, said an official at the LTU Karachi.
The government introduced Section 236P through Finance Act, 2015, bounding banks to deduct advance tax on transactions other than through cash. The deduction of withholding tax from non-filers included demand draft, pay order, special deposit receipt, cash deposit receipt, short term deposit receipt, call deposit receipt, rupee travellers cheque or any other instrument of such nature.