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February 12, 2019

WHT collection from non-cash transactions up at Rs6.156bln

Business

February 12, 2019

KARACHI: The collection of withholding tax from non-cash banking transactions has increased by one percent to Rs6.156 billion during July–January 2018-19, sources said on

Monday.

Federal Board of Revenue (FBR) had collected Rs6.084 billion in the first seven months of the last fiscal year under this head. The sources said collection witnessed improvement after declining during the past two quarters.

On the other hand, collection, however, increased 13 percent to Rs941 million in January 2019 as compared to Rs830 million in the same month last year.

This boost is attributed to hike in withholding tax rate on non-cash banking transactions through Finance Supplementary Act, 2018, passed by the parliament in October 2018. A provision of Section 236P was introduced to Income Tax Ordinance, 2001 through Finance Act, 2015 making it mandatory for financial institutions to collect/deduct 0.6 percent

on transaction of amount above Rs50,000/day from non-filers of income tax returns.

These measures had come on the heels of stakeholders’ taking exception to the imposition of higher rate on non-filers. Pursuing its business-easing policies, the government had temporarily reduced the rate to 0.4 percent, applicable till June 30, 2018.

However, the previous government set the rate at 0.4 percent as part of the statute through Finance Act, 2018 or Budget 2018/2019. The sources said that this head of withholding tax was introduced to increase the number of returns filed.

Later, the present government enhanced the rate to 0.6 percent to increase the cost of transactions for non-filers. These curbs helped increase the compliance rate, the sources said. The FBR received 0.8 million returns in 2013 and following these harsh measures against non-filers the number of active taxpayers had gone up to 1.82 million in tax year 2017.

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