ISLAMABAD: The Federal Board of Revenue (FBR) collected Rs11.31 billion on non-cash banking transactions by non-filers during the first 11 months of the outgoing fiscal year.
FBR secured Rs11.55 billion on non-cash banking transactions by non-filers of income tax returns in the corresponding period of 2015-16. Sources said expansion in cash-based transactions and drive to compel taxpayers to file income tax returns caused deceleration in withholding tax collection.
The government, in the budget 2015/16, introduced Section 236P into Income Tax Ordinance 2001 and imposed 0.6 percent withholding tax on non-cash banking transactions by non-filers. The rate was reduced to 0.3 percent on July 11 and later revised up to 0.4 percent in March 2016 and remained applicable till June 30, 2017. Banks are responsible to collect this tax from non-filers at the time of demand draft, pay order, rupee traveller’s cheque or special, cash, short-term and call receipts.
An official at Large Taxpayers Unit Karachi said the number of return filers for tax year 2016 increased to 1.18 million till June 17, up 16 percent compared with around 1.03 return filers in the same period of last year.
The cash handling is mainly seen at the retail stage in entire supply chain. Since the introduction of the withholding tax provision, the retailers withdrew around Rs25 billion from banks and their deposits sharply fell 14.5 percent.
The deposits of retailers amounted to Rs176.84 billion as on June 30, 2015, which fell to Rs15.29 billion as on May 31, 2017, said the State Bank of Pakistan (SBP).
