State Bank proposes abolishing WHT on cash withdrawal

ISLAMABAD: The State Bank of Pakistan (SBP) has proposed to abolish withholding tax (WHT) on cash withdrawal from banks in the upcoming budget. The central bank also asks for doing away with Super Tax on the banking sector.

According to the proposals of SBP sent out to FBR and read out by this scribe argued that individuals and businesses reduce the use of banking channels and prefer to keep the cash out of banking channels. The Currency in Circulation to Deposit Ratio that had increased from 293 percent in June-15 started declining and it just grew up by just 41.1 percent in Jan 20. It is suggested that the WHTs on cash withdrawals should be removed to improve the deposit mobilization and growth of financial sector in Pakistan.

The SBP has proposed to align the corporate tax rate applicable on banks with that of other companies by reducing it from 35% to 29%. In the similar context, the super tax of 4 percent, in addition to the corporate tax rate, should also be withdrawn in the coming budget.

The SBP has proposed a tax exemption for Corporate Restructuring Company (CRC) for five years from starting its operations.