Non-cash banking tax revenue up 21pc in July-Mar

KARACHI: Withholding income tax collection from non-cash banking transactions increased 21 percent to Rs7 billion during the first nine months of the current fiscal year, official data showed on Thursday.

The collection of withholding tax on non-cash banking transactions increased from Rs5.8 billion in the corresponding months of the last fiscal year, according to official statistics of Large Taxpayers Office (LTO) Karachi.

Sources said the ease in coronavirus restrictions during a couple of months in the period under review improved the commercial and industrial activities, which improved transactions in the banking system.

The deposits of the banking system reached to a record high of Rs17.9 trillion by March 31. The banking deposits registered 18.3 percent growth when compared with Rs15.1 trillion in the corresponding month of the last year.

The sources said withholding tax was imposed on individuals making banking transactions other than cash and who have not filed their annual income tax returns and are not on the active taxpayers list (ATL).

The withholding tax on non-cash transactions is applicable at 0.6 percent on those who do not appear on the ATL.

Despite a significant increase in the number of active taxpayers the withholding tax collection registered handsome growth.

The number of active taxpayers increased to 2.54 million for tax year 2020 by April 11, 2021. The number of active taxpayers has increased by 367,159 since the launch of ATL on March 1, 2021. The FBR officials said the number would further increase as the current ATL would remain applicable till February 28, 2022. The government introduced the withholding tax provision through Finance Act, 2015 and a new Section 236P was inserted into Income Tax Ordinance, 2001. The provision aimed at increasing the burden on persons not filing income tax returns.

The collection of withholding tax on non-cash banking transactions witnessed an increase of 57 percent to Rs1.46 billion in March compared with Rs932 million in the same month of the last year.