Collection on non-cash bank transactions up 103pc in April

KARACHI: Tax collection from non-cash banking transactions surged 103 percent in April 2021 largely on account of a massive decline in the number of active taxpayers, officials said on Saturday.

The collection of income withholding tax on non-cash banking transactions increased to Rs1.14 billion during April 2021 as compared with Rs564.97 million in the corresponding month of the last year.

The withholding tax rate at 0.6 percent has been imposed through Section 236P of Income Tax Ordinance, 2001. The Section 236P was introduced through Finance Act, 2015 in order to increase the number of income tax return filers.

At present this levy is applicable on those persons, who are not on the Active Taxpayers List (ATL) and making non-cash banking transfers above Rs50,000 in a day.

Sources in the Federal Board of Revenue (FBR) attributed the sharp increase in revenue collection to a decline in the number of active taxpayers.

A large number of income tax return filers failed to make it to the ATL following a change in the definition by the FBR. Now a taxpayer will only qualify as an active taxpayer if he/she files his/her income tax return by due date. In other cases the filing of return is after the due date then the person requires paying surcharge for late filing the return and for appearance on the ATL.

Appearance on the ATL assures exemption of withholding tax or reduction in rate of withholding tax on various transactions.

The FBR issued the ATL for tax year 2020 on March 01, 2021 and denied the inclusion of names of those taxpayers who filed their returns after the due date i.e. December 08, 2020.

This means only 2.17 million (as per ATL issued on March 01, 2021) taxpayers qualified as active taxpayers as against 3.11 million active taxpayers for tax year 2019.

The sources said on a weekly basis those taxpayers who filed returns after the due date were paying surcharge to appear on the ATL.

The latest ATL issued on May 03, 2021 the number of active taxpayers increased to 2.62 million for the tax year 2020.

They said the revenue collection under this head would decline as the number of active taxpayers would increase. The total collection under Section 236P increased by 25 percent to Rs7.98 billion during July–April 2020/2021 as compared with Rs6.41 billion in the corresponding period of the last fiscal year.