Tax authorities to launch withholding agents’ audit drive in August

KARACHI: Tax authorities are flexing their muscles to launch a mega audit drive from mid of August to verify statements about deduction of income tax from filers and non-filers by withholding agents, official sources said on Thursday.
The Federal Board of Revenue (FBR) sources said the amendments into the tax laws, introduced through the Finance Act, 2015, have empowered tax officials to conduct audit of non-filers and defaulters.
“We are looking forward to the statements about the deduction on cash and non-cash withdrawals to be submitted by banking companies,” an official said. The statements contain the whole details of taxpayers.
A withholding agent is required to provide the complete statement of withholding deduction and payment on 15th of every month to tax departments under Section 165 of the Income Tax Ordinance, 2001.
The section also requires the withholding agent to provide the name, computerised national identity card number, national tax number and address of each taxed person.
The sources informed The News that a meeting between the representatives of banking companies and the FBR officials was recently held at the large taxpayers unit Karachi to discuss the details of depositors and deduction from non-filers and filers.
“Banks agreed to submit complete details of deduction of withholding taxes,” the official said. Earlier, they were reluctant to share the details with the tax authorities under the secrecy laws.
However, he added that the said section of the Income Tax Ordinance, 2001 overrides all the conflicting provisions contained in the Protection of Economic Reforms Act, 1992, the Banking Companies Ordinance, 1962, the Foreign Exchange Regulation Act, 1947 and the regulations made under the State Bank of Pakistan Act, 1956.
A new section 236P, introduced into the Ordinance, is about deduction of withholding tax from non-filers on non-cash transaction.
The government cut the tax to 0.3 percent till 30 September from the previous 0.6 percent imposed through the Finance Act, 2015.
“Its purpose is to detect the big transactions which have no tax records,” a senior official said.
Some amendments also empower the commissioner to start proceedings of audit in cases where income tax return is not filed and due tax liability is not paid.
The sources said the commissioner needs not any approval for this action as such cases will automatically be selected for audit under the laws.