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June 25, 2011

National Bank served notice for Rs9bn tax evasion


June 25, 2011

KARACHI: The Federal Board of Revenue (FBR) has issued recovery notice of over Rs9 billion to National Bank of Pakistan (NBP), which was allegedly evaded or concealed after deduction of withholding tax, official sources said on Friday.
“A demand notice for payment of Rs9.4 billion has been sent to NBP for short payment over the years,” a FBR official said on the condition of anonymity. “The demand was created on failure to produce records against interest payment on transactions claimed by the bank.”
The official said monitoring of withholding tax deduction was conducted on record available with NBP head office.
Meanwhile, at the branch-level, the field formation of the FBR is providing feedback regarding discrepancies, the official added.
The official said that NBP was given June 30 to make the payment, after which action would be initiated provided in the Income Tax Ordinance, 2001.
When contacted, the NBP’s official spokesman confirmed the issuance of notice to the bank and said that the FBR conducted monitoring of withholding tax for 2008, 2009 and 2010. “The FBR served notices against which the bank provided reconciliation statements along with evidence to support tax deposit,” the spokesman said.
He said that the bank is in process of settlement of this issue with FBR in accordance with the provisions of Income Tax Ordinance, 2001.
The monitoring of withholding tax was initiated three months back at Large Taxpayers Unit (LTU), Karachi, a revenue collection arm of the FBR, which identified serious irregularities on the part of banks as they did not remit the due share to exchequer.
Khawar Khursheed Butt, Member - Inland Revenue, FBR, recently confirmed that around 20 banks had been found involved in these irregularities and revenue authorities estimated around Rs30 billion would be collected by June 30.
Butt had said that Rs22 billion recovery notices had been issued to eight banks. The member said that banks

moved the Sindh High Court for stay order against FBR notices. “The honorable court did not grant such bid of banks and suggested appeal at different fora,” Butt said.
The monitoring of withholding tax is part of revenue generation, especially for the ongoing fiscal year in which the revenue body is facing huge difficulties in meeting the target of Rs1588 billion. “These measures will help the FBR to achieve FY11 revenue target,” another FBR official said.

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