Banks refuse tax benefits to late return filers

KARACHI: Banks refused to consider active taxpayers status on website of the Federal Board of Revenue (FBR) for granting tax benefits to people who filed returns with surcharges, it was learnt on Saturday.

A number of taxpayers are paying surcharge under a section 182 of the

Income Tax Ordinance 2001 for inclusion of their names in the active taxpayers list (ATL). Though upon payment of surcharge, the status of taxpayer is immediately updated in the ATL on the web portal, the excel file available on the web portal of the FBR remains outdated, which is

causing severe problems to the taxpayers as far as withdrawal from banks are concerned, Karachi Tax Bar Association (KTBA) said in a letter to Member Inland Revenue (Operations).

Banks are not relying on the online verification available on the web portal of the FBR, the KTBA said.

Tax practitioners demanded the FBR to update ATL on daily basis and banks should also be notified for deduction/collection of withholding tax. Banks are refusing to accept online verification of active status of a taxpayer at the time of transactions, they said.

Taxpayers appearing on the ATL are not subject to withholding tax at the time of making transactions above Rs50,000 in a single day.

The KTBA said the excel file of the ATL available on the FBR web portal should be updated on daily basis and banks should be asked to rely on the

online verification before withholding/deducting the tax on banking transactions.

Even in cases where manual extensions are requested and where no reply is received and the returns are filed within the extended time, the names are not appearing in the ATL. Such cases should be treated as active.

“Where taxpayers had filed the manual extension for filing returns within time and where the returns had been filed within the time applied for, the names of such taxpayers should be included in the ATL and the ATL should be updated immediately without payment of surcharge as prescribed under section 182A of the Income Tax Ordinance, 2001,” KTBA said in the letter.

Taxpayers opted rightly to file their returns manually (paper return) within given timeline as they were legally not bound to file their returns electronically. Their names are also not on the

ATL. “Where taxpayers had filed their returns manually, the names of those taxpayers should be included in the ATL forthwith.”