ISLAMABAD: Share of withholding tax (WHT) collection in total collection of direct taxes has increased to 67 during Tax Year 2022 despite elimination of many provisions related to the withholding taxes.
The Federal Board of Revenue (FBR) collected an amount of Rs1,534 billion as withholding taxes during the tax year 2022, which is 67 per cent of the total collection of Rs2,182 billion under the head of direct taxes in the same tax year, said a report.
It is worth mentioning that the contribution of withholding taxes in the direct taxes as 44 per cent in the year 1985 and it increased to 65 per cent in the year 1995.
The FBR said that the WHT Regime is a global phenomenon and also a source of revenue for government.
Withholding taxes are also helpful in broadening the tax base with effective use of IT and automation. In this regard, FBR has launched the “Maloomat TaxRay” application to facilitate the taxpayers by using withholding taxes data.
Taxpayers can get the information about their assets and withholding deductions through “Maloomat TaxRay”.
To bring further efficiency in the system, an organization to monitor and manage the system of Withholding Tax Regime, the Directorate General of Withholding Taxes , was created through Finance Act of 2008.
During last few years the focus has been to reduce withholding taxes. High number of withholding provisions adds to complexity and creates undue burden of compliance on different withholding agents.
In an effort, to augment ease of business and simplifying the tax laws numerous sections of Income Tax Ordinance 2001 like; 153B, 23 IA, 23 IAA, 236P, 236Y, 236B, 236L, 236V, 233A have already been omitted.
The WHT collection during FY 2021-22 stood at Rs1,534.4 billion against Rs1,237.3 billion in the preceding fiscal year, indicating a growth of 24 percent.
With the exception of WHT on technical fee all other major items recorded positive growth. WHT from exports recorded the highest growth of around 54 percent in collection, followed by electricity, immovable property and dividends with 39.3 percent, 31.9 percent and 30.6 percent, respectively.
