FBR seeks transaction details from banks

Withholding tax on non-filers

KARACHI: The Federal Board of Revenue (FBR) has sought the details of transactions by non-filers of tax returns and withholding taxes slapped so far on them from banks, officials said on Thursday. 

The officials said the FBR asked banks to provide details of withholding tax on cash withdrawal and non-cash transfers by individuals and corporate entities having multiple accounts.

The revenue body also asked them of details of aggregate amount withdrawn or transferred by individuals or entities from their various branches and multiple accounts based on the same computerised national identity card or national tax number.

The order was related to the latest explanation inserted into Section 231A and 236P Income Tax Ordinance, 2001 through the Finance Act, 2016, which states: “the threshold of Rs50,000 will be aggregate withdrawal or transfers from all the bank accounts in a single day.”

The reasons to insert explanation was to plug misuse by several individuals and corporate entities having multiple accounts in various branches of a bank or having accounts in different banks and making several transactions below Rs50,000 to avoid deduction of the withholding tax.

A tax official said on cash withdrawal of above Rs50,000 per day an income tax return filers pays 0.3 percent as withholding tax and non-filers pays 0.6 percent.

Similarly, on non-cash transaction, which is only for non-filers, the withholding tax is 0.4 percent.

The official said initially the Federal Board of Revenue was seeking account holders of different branches in a bank because it was easy for banks to provide the details.

In case of different banks, the official added that the tax authorities were evolving mechanism for obtaining the details.

The official said since most of banks had made their branches online so it was easy for a head office of a bank to provide such details. The Federal Board of Revenue introduced different rates of withholding tax for filers and non-filers to increase revenue collection and broaden the tax net.

In the fiscal year of 2015/16, the Federal Board of Revenue managed to collect around Rs23 billion from the tax on non-cash transactions by non-filers and succeeded in receiving more than one million income tax returns for the tax year 2015. 

The sources said the Federal Board of Revenue is still compiling revenue collection data of the cash withdrawal from banks.