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August 27, 2015

FBR stops advance tax deduction from active taxpayers


August 27, 2015

LAHORE: The Federal Board of Revenue (FBR) has asked withholding agents to stop advance tax deduction from individual proprietorship taxpayers registered in the Active Taxpayer List (ATL) even if the name of the business is different from that of the owner.
The FBR issued a ‘clarification regarding ATL (income tax)’ the other day in which it observed that certain withholding agents were not accepting the business name of an individual proprietorship appearing in the ATL of Income Tax, if the name of the business was different than the proprietor’s.
The FBR clarified that the taxpayers declared their business name in their tax profile and other declarations. In case of an individual proprietorship, the National Tax Number (NTN) and Computerised National Identity Card (CNIC) were required to be considered for the purpose of the ATL, the clarification said. An individual may run a business with any name or may run more than one business with different names, but a single income tax return was required to be filed.
“Accordingly, the withholding agents are required to accept the NTN, CNIC and the business names for the purpose of the ATL of the Income tax in respect of the individual proprietor, if it is available on the ATL,” the FBR circular instructed.
The FBR officials said this was a major complaint received by the board from across the country since the government introduced withholding tax on all kinds of banking transactions. They said that the traders usually registered their NTN, but to be an active taxpayer, they had to file a return.
The revenue board officials said the majority of traders and small scale businessmen were victims of this injustice. They have an NTN number in their name, not against their company, but are regular in filing their income tax return mentioning all their income.
On the other hand, bank officials said they were following the guidelines issues by the FBR and State Bank of Pakistan in this regard.

The bank officials further said that since now the FBR has clarified the matter, they can entertain the affected account holders.
Lahore Chamber of Commerce and Industry (LCCI) Progressive Group President Khalid Usman welcomed the FBR clarification regarding the ATL of income tax filers. He said that the board would also address the other issues of the ATL.
Another issue was that the new taxpayers, registering in the tax network were neither getting their NTN certificates nor getting updated on the ATL. Usman said that once a person filed their return with the FBR, they should be updated on the ATL within 24 hours, and this updated list should be available the very next morning before banking hours.
“The more the FBR facilitates the taxpayers – the more taxpayers will add in the system, and the tax base will expand rapidly,” he added. “Nobody was against paying taxes, but the FBR, instead of relying on indirect taxes, should broaden the tax net.”
Constitution of committees by the FBR in the name of facilitating the traders would not work, he added. “The government should pay attention to the real cause of concern. This kind of indirect tax will have a multiplied impact on the transactions. It is hampering the banking transactions and the usage of formal money transaction channels.”

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