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Tag: banking transactions

  • SBP withdraws Raast payment transaction limits

    SBP withdraws Raast payment transaction limits

    KARACHI: The State Bank of Pakistan (SBP) on Tuesday withdrew transactional limits of payments made through Raast System i.e. Raast Person-to-Person (P2P) Payment System.

    The SBP issued Circular No. 02 dated March 15, 2022 and stated that to further facilitate users of Raast services it has been decided that with effect from April 1, 2022, there will be no transactional limits on Raast system by SBP.

    Banks/MFBs/EMIs may however set, in their system Raast transaction limits for their customers based on their risk profile in compliance with the relevant Anti-Money Laundering (AML)/Counter Financing of Terrorism (CFT) requirements.

    Further, through previous Circular No. 01 dated February 03, 2022, in terms of para 3 (f) of the circular, customer transaction limits for Raast payments shall not be less than Rs.200,000/- per transaction or the transaction limits applicable as per the account type and prescribed by SBP from time to time.

    The aggregate customer limit assigned to Raast payments shall not be less than the Interbank Fund Transfer (IBFT) limit, the SBP said.

    The aggregate limit shall be communicated to the customers and available transaction limit shall be shown in their mobile apps/internet banking portals.

    Banks/MFBs/EMIs shall ensure that above mentioned technical as well as operational arrangements and readiness are in place not later than March 21, 2022.

    Banks/MFBs/EMIs shall ensure strict compliance with PSD Circular No. 01 of 2021 by providing their customers with the option to increase or decrease the transaction limits by using their mobile apps/internet banking portals, no later than April 10, 2022, the SBP said.

    It is reiterated that Banks/MFBs/EMIs shall put in place robust internal controls and strong risk mitigants to prevent fraudulent activities, misuse/abuse of the transaction limits and risks related to the safety and security of Raast system at their end.

    The central bank has implemented Pakistan’s Instant Payment System “Raast” to offer instant, reliable and free person-to-person payment services to the people of Pakistan with the objective of promoting digital financial services and financial inclusion.

    READ MORE: SBP launches free P2P money transfer under Raast

    The first phase of the system, “Raast – Bulk Payments”, was launched on January 11, 2021 and is live since then.

    The second phase of Raast, which enables instant Person-to-Person (P2P) fund transfers and settlement is also launched.

    READ MORE: PM Imran launches 2nd phase of Raast payment system

    Customers would be able to send and receive funds using either their International Bank Account Number (IBAN) or their Raast ID. Initially customers would be able to use their registered mobile numbers as their Raast ID and link it to any of their bank account for conveniently receiving funds.

    READ MORE: CDC successfully processes dividends through RAAST payment gateway

  • Finance Act, 2021: Withholding tax on banking transactions abolished; highlights of relief measures

    Finance Act, 2021: Withholding tax on banking transactions abolished; highlights of relief measures

    ISLAMABAD: The Finance Act, 2021 has abolished the withholding tax on banking transactions that were applicable under Income Tax Ordinance, 2001.

    Following are the details of relief measures announced in the Finance Act, 2021:

    Deletion of 12 withholding taxes

    ProvisionDescription
    153BCollection of tax on payment of royalty to residents
    231ACollection of tax on cash withdrawal
    231AACollection of tax on banking instruments
    236PCollection of tax on banking transactions other than through cash
    236YCollection of tax from persons remitting amounts abroad through credit or debit or prepaid cards.
    236BCollection of tax on domestic air travel
    236LCollection of tax on  international air travel
    236VCollection of tax on extraction of minerals
    233ACollection of tax  from members by a stock exchange registered in Pakistan
    233AACollection of tax on marginal financing by NCCPL
    234ACollection of tax from CNG stations
    236HACollection of tax on certain petroleum products

    Merging of 3 withholding taxes with other existing  provisions

    ProvisionDescriptionMerged with
    150ADeduction of tax on return on investment in SukuksProposed to be merged in section 151 for residents and in section 152 for non-residents which deal with such payments
    152ADeduction of tax on payments for foreign produced commercialsTo be merged with section 152 which deals with payments to non-residents
    236SCollection of tax on dividend in specieTo be merged with section 150 which deals with dividend

    Reduction in generalized rate on Minimum Tax on Turnover basis and increase in threshold for individuals and AOPs for chargeability of minimum tax

    Broadening of scope of IT services by inclusion of cloud computing and data storage services

    Exemption to Special Economic Zone Enterprises from payment of  minimum tax

    Ten year tax exemption for Special Technology Zone Authority, Zone Developers and Zone Enterprises

    Tax exemption on the import of capital goods and dividend income of private funds from investment in special technology zone enterprise

    Introduction of special tax regime for manufacturing SMEs

    Exemption from tax on income of deep conversion new refineries and BMR projects of existing refineries for 20 and 10 years respectively

    Reduced rate of withholding tax of 3% on oilfield services, warehousing services, logistic services, collateral management services and telecommunication services

    Inclusion of telecommunication services in definition of  industrial undertaking

    Exemption to Electronic warehousing receipts traded on Pakistan Mercantile Exchange 

    Allowance of provincial WWF and WPPF as a deductible allowance while calculating income

    Adjustment of business loss against property income

    Unconditional grant of exemption from tax to certain organizations

    Withdrawal of power of Commissioner to reject advance tax estimates presented by taxpayer

    Non recognition of gain/loss on disposal of assets to non-residents under gift from relative, inheritance and agreement to live apart

    Reduction in tax rate on capital gain tax on disposal of securities from 15% to 12.5%

    Withdrawal of power of tax authorities to conduct inquiry under section 122(5A)

    Inclusion of live animals, raw hides and unpackaged meat in definition of agriculture produce

    Reduction in tax liability by 25% for women entrepreneurs

    Exemption from tax on import of books and agriculture equipment

    Exemption from tax for  bagasse fired power generating units and reduced rate of tax on dividend income from such projects 

    Withholding tax rate for oil tanker services reduced from 3% to 2%

    Extension in time limits for availing tax benefits under section 100D and Eleventh Schedule vide Income Tax (Amendment) Ordinance 2021 dated 21.02.2021 made part of the bill.

    Tax exemptions and concessions for  Roshan digital accounts and implementation of electric vehicles and mobile phone policy implemented vide Tax Laws (Amendment) Ordinance, 2021 dated 11.02.2021 made part of bill

  • FBR issues withholding tax rates on cash, online banking transactions

    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.

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  • Return filers enjoy tax free banking transactions

    Return filers enjoy tax free banking transactions

    KARACHI: The income tax filers have started enjoying withholding tax exemption on transactions of money through banking channels.

    After the implementation of amendments made through Finance Supplementary (Second Amendment) Act, 2019 the income tax return filers are no more required to pay 0.6 percent withholding tax on cash withdrawal.

    The exemption is applicable on the taxpayers, who are appeared on the Active Taxpayers List (ATL) for tax year 2018.

    Before the amendment the rate of withholding tax was 0.3 percent for return filers on cash withdrawal of Rs50,000 in aggregate from banking system per day.

    In order to give incentives to compliant taxpayers and encourage return filing the government exempted the withholding tax on cash withdrawal.

    Now the withholding tax on any banking transactions i.e. cash or non-cash transactions is only applicable on non-filers of income tax returns.

    The non-filers are required to pay 0.6 percent on transactions under Section 231A and Section 236P of Income Tax Ordinance, 2001 on transactions of Rs50,000 per day.

    Tax experts said that the withholding tax on cash withdrawal on non-filers was major impediment in improving banking deposits.

    They said that it would encourage non-compliant to file their returns and further the measure would also reduce channels of cash economy.