KARACHI: Bank deposits by retailers and wholesalers decreased by seven percent in the last fiscal year as the withholding tax imposed on banking transactions by non-filers of tax returns encouraged dealings through alternative channels.
According to the State Bank of Pakistan (SBP) data, the banking deposits of the wholesalers dropped seven percent to Rs99.15 billion as at June 30 as compared to Rs107.53 billion a year ago. Similarly, the retailers’ deposits declined five percent to Rs168.07 billion as against Rs176.83 billion.
The government, in the budget 2015/16, introduced Section 236P of Income Tax Ordinance, 2001 and effective from July 01, 2015 a withholding tax rate of 0.6 percent was imposed on non-cash transaction of up to Rs50,000 by non-filers in a day. Following the protest from the trade community, the rate was reduced to 0.3 percent on July 11. However, the reduced rate was enhanced to 0.4 percent from March, which is still applicable.
The bank deposits of textile sector decreased 13 percent in the year under review as the sector’s total deposits came down to Rs107.7 billion from the previous year’s level of Rs123.61 billion. The deposits of total manufacturing sectors, however, increased to Rs692.14 billion at June 30 compared with Rs666.05 billion over the last year.
