Non-filers to pay 0.6pc WHT now

ISLAMABAD: The government has accepted the FBR’s proposal to increase the withholding tax (WHT) rate on cash withdrawals from banks by 20 percent, jacking it up from 0.5 percent to 0.6 percent, for non-filers in the coming budget 2015-16.
If this proposal gets through the Cabinet as well as parliament in the shape of the Finance Bill 2015 then the tax rate will create a difference of 100 percent between filers and non-filers.The tax-filers are paying 0.3 percent WHT rate on cash withdrawals and the non-filers’ rate may go up from 0.5 to 0.6 percent in the coming financial year 2015-16.
Prime Minister Nawaz Sharif and Finance Minister Ishaq Dar Thursday gave the go ahead to the tax authorities for taking steps aimed at broadening the tax base, differentiating between filers and non-filers for increasing tax burden and facilitating those paying their due taxes.
“Yes, the proposal for increasing WHT rate on cash withdrawals from banks has got through and the rate will be jacked up from 0.5 percent to 0.6 percent in the coming budget,” said a top gun of Finance Ministry here on Thursday on condition of anonymity.
The FBR had proposed to the government to increase 80 to 100 percent WHT rate in the budget but the finance minister agreed to jack it up in gradual manner.The government charges 0.5% withholding tax on drawing Rs50,000 or more from banks from non-filers.
There is incentive for taxpayers, as they have the right to claim refund once they file income tax returns.Those who file their income tax return are paying 0.3% withholding tax, underscoring that the government wants to use it as a revenue spinner and does not seem to be in a mood to withdraw the levy from those who are tax-compliant.
The FBR had collected Rs12.5 billion in fiscal year 2012-13. After increasing it to 0.3%, its collection went up close to Rs19 billion in 2013-14. By increasing rate for non-filers, the FBR is eyeing to collect revenues in the range of Rs25 to 30 billion in the next fiscal year.
The government envisages FBR’s tax collection target of Rs3,100 billion in the coming fiscal year against the revised target of Rs2,605 billion for outgoing fiscal year ending on June 30, 2015.
The FBR had fixed the target of Rs2,810 billion but it was revised down by thrice by bringing it down to 2,756 billion, then Rs2691 billion and finally to Rs2605 billion for 2014-15.It is not yet known how much the FBR will be able to display on its board on June 30, 2015.