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November 17, 2019

WHT collection on banking transaction falls 21pc in July-October

Business

November 17, 2019

KARACHI: Withholding tax collection from non-cash banking transactions fell 21 percent year-on-year to Rs2.38 billion during the first four months of the current fiscal year of 2019/20 as improved compliance with returns filing law saved taxpayers from paying additional taxes on non-filing, sources said.

The sources said the tax collection from non-cash transactions declined owing to improvement in compliance with filing of returns.

The tax collection under this head fell from Rs3.03 billion in the corresponding period of the last fiscal year, the sources in Large Taxpayers Unit, Karachi said.

The sources said there was a record number of income tax returns filing for the tax year 2018 and it reached 2.67 million. The number increased mainly due to frequent revision in deadline for filing of returns.

The Federal Board of Revenue (FBR) aims to bring the number of income tax return filers to five million within the next couple of years.

The FBR collects extra withholding tax on banking transactions from individuals who don’t appear on active taxpayers list (ATL). An individual is required to file annual income tax returns of the preceding tax year in order to appear on the ATL.

The government a section (236P), through Finance Act 2015, into the Income Tax Ordinance 2001 under which 0.6 percent withholding tax was imposed only on non-filers of income tax returns when they made an aggregate transaction of Rs50,000 or more per day.

The government reduced the tax rate to 0.3 percent in the same fiscal year after protest from stakeholders.

The rate was again increased to 0.4 percent in March 2017 and finally the rate made a part of the statute through Finance Act 2018.

The present government, through Finance Supplementary (Amendment) Act 2018 in October 2018, restored the withholding tax rate to 0.6 percent to make a banking transaction costlier for non-compliant taxpayers.

The government introduced a new Tenth Schedule into the income tax law, through Finance Act 2019, under which withholding tax would be collected from individuals who don’t appear on the ATL.

The income tax return filing was mandatory to be included in the ATL. An individual will appear on the ATL, if he files annual return by due date. But, there is a relaxation under which an individual can be enrolled into the ATL after paying fine for late filing.

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