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December 6, 2019

SHC disposes banks’ petitions against data sharing with FBR

Business

December 6, 2019

KARACHI: A high court on Thursday disposed off petitions filed by the banks that sought restriction on the tax authorities to get an access to individuals’ bank account, paving the way for the administration to obtain financial transaction data of banks’ clients without their formal consent.

The Sindh High Court disposed the petitions filed by the banks against implementation of a provision and that would enable the tax authorities to access or obtain details of transactions in the banking system.

FBR Chairman Shabbar Zaidi commended the cooperation of banks and its association for resolving the issue.

“I thank Pakistan Banks’ Association and the management of all the banks for complete cooperation in disposing off long outstanding pending litigation,” Zaidi said in a tweet on Thursday.

“We assure on behalf of FBR that we will reciprocate confidence and cooperation extended to us.”

The implementation of the law remained suspended for the past six years as banks invoked secrecy laws for not providing the details of transactions.

Now, the court set aside all the cases following a landmark agreement reached between the FBR and Pakistan Banks Association (PBA) on November 27, 2019.

Officials at the Large Taxpayers Unit (LTU) Karachi said FBR chairman has personally been engaged to convince the banks into sharing data and realising the importance for broadening of tax base and documentation of the economy.

In the last month’s meeting at the LTU Karachi, issues were discussed regarding information to be provided by the banks under a law (section 165A of the Income Tax Ordinance, 2001).

FBR chairman previously emphasised that the section 165A had been amended on the specific request of the PBA in 2014 and 2018, and recently through a Supplementary Finance Amendment Act, 2019. Therefore, members should have no objection to the withdrawal of petition in the higher courts, he added.

The meeting, after detailed deliberations, decided that the PBA would withdraw their petitions from the higher courts and provide information under section 165A after mutual consultation with the FBR.

Under the section, banks are required to provide a list of individuals containing particulars of cash withdrawals exceeding Rs50,000 in a day and tax deductions thereon, aggregating to Rs1 million or more during each preceding calendar month.

The banks are also obliged to provide a list containing particulars of deposits aggregating Rs10 million or more made during the preceding calendar month.

Besides, the banks would also provide a list of payments made by any individual against bills raised in respect of a credit card issued to the individual, aggregating to Rs200,000 or more during the preceding calendar month.

Further, the banks are bound to provide a list of individuals receiving profit on debt exceeding Rs500,000 and tax deductions thereon during preceding financial year.

The deposit base of the banking system increased to Rs13.74 trillion till July 2019 from Rs7.31 trillion as of June 2013.

The transactions in the financial system showed the value increased eight percent to Rs602.8 trillion in last fiscal year of 2018/19. That was compared with Rs558.8 trillion in the preceding fiscal year.

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