KARACHI: The Federal Board of Revenue (FBR) has collected Rs10.023 billion withholding tax on non-cash banking transactions by non-filers during the first 10 months of the ongoing fiscal year as compared with Rs10.386 billion of the same period of previous year, reflecting 3.5 percent decline.
According to the official sources, the decline in withholding tax collection from non-filers was due to rise in cash-based transactions and increase in returns filing.
The government, through Finance Act 2015, inserted a Section 236P into Income Tax Ordinance 2001, imposing 0.6 percent withholding tax on non-cash banking transactions by non-filers of tax returns. The move was aimed at to encourage people to file returns and wealth statements.
However, the government, after protest from retailers and wholesalers, reduced the rate to 0.4 percent, which is effective till June 30. FBR sources said the rate reduction failed to attract the retailers and wholesalers towards the documentation and they rather opted to conduct payment transactions out of the banking system.
Sources further said the increase in annual returns filing also brought down withholding tax collection. The income tax return filings rose 16 percent to 1.15 million for tax year 2016 up to May 14 as compared to 0.99 million for tax year 2015 up to May 20, 2016.
