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.