KARACHI: The Pakistan Banks’ Association (PBA) has submitted its recommendations for the Federal Budget 2017-2018 on the banking sector to the Federal Board of Revenue (FBR).
Pakistan’s banking sector, the largest contributor to the exchequer, paid more than Rs140 billion tax and collected and paid more than Rs134 billion withholding tax to the FBR in the year ended Dec 31, 2016. Therefore, the total contribution to the exchequer from members of the PBA was over Rs 274 billion.
This has enabled the banking industry to continue playing an integral role in the economic development of the country and supporting major initiatives of the government, the FBR and the SBP.
The PBA’s key recommendations for the Federal Budget 2017-18 are deletion of Section III (4) of ITO 2001 and amendment to the Pakistan Economic Reform Act (PERA 1992) by excluding all persons resident in Pakistan, as this section presently provides immunity to a taxpayer on the source of an amount, which has been remitted from outside Pakistan in foreign exchange through the banking channels.
In PBA’s view, the provisions are often misused as some businessmen may remit undeclared income through unofficial channels, which is then brought into Pakistan in foreign exchange through banking channels. While no taxes are paid on such (undeclared) income, it can be laundered into white money at a small cost of 3% to 4%. This recommendation of the PBA will help curb the practice of whitening of money under the umbrella of PERA.
