ISLAMABAD: The Federal Board of Revenue has geared up for compiling a database of all courts including high courts, banking courts and district and sessions courts to ensure collection of 10 percent withholding tax on account of auctions conducted by the courts under section 236A of the Income Tax Ordinance, 2001.
According to details, the Regional Tax Office II Karachi shared the findings of its study with the FBR, citing that a large number of auctions take place under the supervision of Sindh High Court Nazer, Official Assignees and Banking Courts. The study prompted the Additional Commissioner to write to the Sindh High Court Registrar, who in response, directed the SHC Nazer, the Official Assignee, all District and Sessions Judges and all the Judges Banking Court across the province to strictly comply with Section 236A of Income Tax Ordinance, 2001 in the auctions.
Following the facts, the FBR directed the RTOs Chief Commissioners to obtain information of the auction conducted by the courts.
According to statistics the total amount collected up to January, 2014 u/s 236A stands at Rs1,060.456 million which does not correspond with the number of withholding agents which are bound to collect advance tax u/s 236A. In this regard, the FBR directed the Chief Commissioners to focus on the collection u/s 236A to ensure collection under this head to its optimum level.
Under section 236A (Advance tax at the time of sale by auction) of the Income Tax Ordinance 2001, any person making sale by public auction [or auction by a tender], of any property or goods [(including property or goods confiscated or attached)] either belonging to or not belonging to the Government, local Government, any authority, a company, a foreign association declared to be a company under sub-clause (vi) of clause (b) of sub-section (2) of section 80, or a foreign contractor or a consultant or a consortium or Collector of Customs or Commissioner of [Inland Revenue] or any other authority, shall collect advance tax, computed on the basis of sale price of such property and at the rate specified in Division VIII of Part IV of the First Schedule, from the person to whom such property or goods are being sold. The credit for the tax collected under sub-section (1) in that tax year shall, subject to the provisions of section 147, be given in computing the tax payable by the person purchasing such property in the relevant tax year or in the case of a taxpayer to whom section 98B or section 145 applies, the tax year, in which the “said date” as referred to in that section, falls or whichever is later. For the purposes of this section, sale of any property includes the awarding of any lease to any person, including a lease of the right to collect tolls, fees or other levies, by whatever name called, the section 236A added.
According to the FBR, it is committed to effectively monitoring withholding taxes as more than 80 to 90 percent of the RTOs budget is met through WHT. The 236A of the Income Tax Ordinance 2001 is an important section which binds the withholding agent to collect advance tax at the rate of 10 percent from the buyer at the time of the realisation of sale proceeds.
