DERA GHAZI KHAN City News

Withholding tax on transactions hurting banks
From Our Correspondent
DERA GHAZI KHAN: The 0.6 per cent withholding tax on the bank transactions is reducing the deposits with the commercial banks. The management of the various banks have claimed that unjustified tax is allegedly promoting the private network (cash dealings) across the country as the account holders and business community - most of them non-filers with the Federal Board of Revenue (FBR) - are diverting the cash flow.
Senior bankers say the case flow in the first seven working days of the current fiscal year remained much lower than the previous year, showing the lack of confidence on the part of traders with the move.
They are of the view that if the withholding tax is not withdrawn then the banks would be gradually losing deposits and business with traders which serve as the backbone for the commercial banking.
According to details, with the consultation and pressure exerted by the FBR, the finance ministry got approved a provision in the Finance Act by which the banks have been made bound to collect 0.6 per cent withholding tax for each transaction above Rs 50,000 apart from the routine charges for the telephonic transfer, online demand draft, inter bank as well as intra bank transfer, rupees traveller cheques and cash withdrawals that irked the traders and the business circles, especially the smaller units.
The businessmen are of the view that they are not earning so much to pay heavy taxes, while profit margins have already shrunk due to the business competition.
They say most of the businesses are being run on the credit basis where the heavy debits are non-recoverable. As such, the traders now prefer hundi system which is comparatively cost-effective low.
The traders have appealed to the prime minister to with draw the tax for the uplift and the growth of the business sector otherwise they would have to suffer losses.
On the other hand, as per the various reports the FBR is not getting good response for the issuance of the national tax number as well as the tax returns as was being expected and claimed.