FBR issues withholding tax rates on cash, online banking transactions

KARACHI: Federal Board of Revenue (FBR) has issued withholding tax card for tax year 2019/2020 and prescribed the rate of withholding income tax to be deducted/collected on transactions made through banking system either by cash or online transfers.

The FBR issued updated Withholding Tax Card for Tax Year 2020 incorporating changes brought through Finance Act, 2019 and effective from July 01, 2019.

The FBR said that the newly introduced tenth schedule shall not apply on the banking transactions made through cash or online transactions. As per Tenth Schedule of the Income Tax Ordinance, 2001 persons not appearing on the Active Taxpayers List (ATL) are subject to pay 100 percent more withholding tax rate.

The FBR said that under Section 231A of the Income Tax Ordinance, 2001 every banking company shall collect 0.6 percent on cash withdrawal above Rs50,000 per day from account holders or withdrawing cash at the time the cash is withdrawn. “Payment for cash withdrawal, or sum total of payment for cash withdrawal, in a day, exceeding Rs, 50,000/- for persons not appearing in the ATL.”

The withholding tax rate shall be 0.6 percent under Section 231AA (1) to be collected by banking companies at the time of sale against cash of any instrument including demand draft, payment order, CDR, STDR, RTC, any other instrument of bearer nature or on receipt of cash on cancellation of any of these instruments where sum total of transactions exceeds Rs, 25,000 in a day, for persons not appearing in the Active Taxpayers’ List.

Similarly, the withholding tax rate shall be 0.6 percent under Section 231AA (2) to be collected by banking companies at the time of transfer of any sum against cash through online transfer, telegraphic transfer mail transfer or any other mode of electronic transfer, where sum total of transactions exceed Rs. 25,000/- in a day, for persons not appearing in the Active Payers’ List.

The advance tax on banking transactions other than through cash under Section 236P shall be at 0.6 percent to be collected:

(i) Every Banking Company shall collect Advance tax from a person whose name is not appearing in the active taxpayers’ list on sale of instruments, including demand draft , pay order, special deposit receipt, cash deposit receipt, short term deposit receipt, call deposit receipt & rupee travelers’ cheque; where payment for sum total of all transactions exceeds Rs, 50,000 in a day.

(ii) Every Banking Company shall collect advance tax from a person whose name is not appearing in the active taxpayers’ list on transfer of any sum through cheque or clearing, interbank or interbank transfers through cheque, online / telegraphic / mail transfer; where payment for sum total of all transactions exceeds Rs, 50,000 in a day.

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