ISLAMABAD: Withdrawal of tax on banking transactions has caused a loss of over Rs31 billion to the Federal Board of Revenue (FBR).
(more…)Tag: Section 236P
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Banks directed to collect advance tax from non-ATL persons
ISLAMABAD: Federal Board of Revenue (FBR) has directed banks to collect advance income tax on non-cash banking transactions from persons non-appearing on the Active Taxpayers List (ATL).
Sources said that financial institutions are required to collection advance tax at 0.6 percent on the transactions of above Rs50,000 non-cash banking transactions.
The government introduced the withholding tax provision through Finance Act, 2015 and a new Section 236P was inserted to Income Tax Ordinance, 2001. Under this provision 0.6 percent withholding tax was imposed only on non-filers of income tax returns on aggregate transactions of Rs50,000 per day.
The provision was aimed at increasing burden on person not filing income tax returns.
The government faced opposition from various quarters after the introduction of Section 236P. Therefore, the government reduced the tax rate to 0.3 percent in the same fiscal year of its launch. The reduced rate increased to 0.4 percent in March 2017 and finally this rate made part of the statute through Finance Act, 2018.
However, the present government through Finance Supplementary (Amendment) Act, 2018 in October 2018 restored the tax rate to 0.6 percent in order to made transactions costlier for non-compliant taxpayers.
Through Finance Act, 2019 a new Tenth Schedule was introduced to the Ordinance, under which withholding tax would be collected form persons not appearing on the ATL.
Previously, the income tax return filing was mandatory for appearing on the ATL. But in the latest arrangement a person will only be appear on the ATL if he files annual return by due date.
However, after paying late filing fine a person can enroll his name to the ATL.
The FBR sources said that the levy of advance tax on non-cash banking transactions that is only applicable on those persons not appearing on the ATL, had helped the FBR to receive all time high number of returns of 3 million for the tax year 2019 by December 21, 2020.
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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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