Business

Banking transactions: KATI shares dismay over imposition of 0.6% tax

Says many businesses opting for cash payment to avoid the tax.

Our Correspondent July 07, 2015

KATI President Rashid Ahmed Siddiqui, in a statement on Monday, said the trade and business community was in a state of agony due to the imposition of 0.6% withholding tax. CREATIVE COMMONS

KARACHI: As the news of imposition of 0.6% withholding tax on banking transactions spread, several organisations and institutions have started voicing their concern over the levy.

The latest organisation adding its voice to the chorus is the Korangi Association of Trade and Industry (KATI), which has urged the government to withdraw the tax on banking transactions as it is hampering daily business activities.

KATI President Rashid Ahmed Siddiqui, in a statement on Monday, said the trade and business community was in a state of agony due to the imposition of 0.6% withholding tax on all types of banking transactions from non-filers of income tax returns.

He said most of the transactions from July 1 had been shifted to cash mode, which was also affecting the banking system.

KATI Patron-in-chief and Trade Development Authority of Pakistan (TDAP) Chief Executive SM Muneer said the withholding tax had been implemented in Pakistan for the past several years, yet tax authorities had failed to increase the number of return filers as at present they were just around 0.88 million.

This showed that the measures taken in the past had proved counterproductive as the number of return filers further decreased last year, Muneer said, adding the Federal Board of Revenue (FBR) should adopt alternative measures to enhance the number of taxpayers instead of taking steps that discouraged people from becoming registered with the tax authorities.

“Pakistan’s banking system is one of the best and it has been resilient even during the global financial crisis. Such measures will hurt the banking industry, which is contributing immensely to the national revenue collection.”

The KATI president urged the government to avoid undertaking measures that created unnecessary chaos in the system. “Already a tormented city, Karachi cannot afford any further disturbance,” he said.

Published in The Express Tribune, July 7^th, 2015.

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COMMENTS (6)

Johnson Jones | 8 years ago | Reply The government of Pakistan has to deal with a very real problem: On one hand the tax collection machinery is inefficient and corrupt and on the other hand the businessmen and potential tax payers are not filing their tax returns The government has to rope in these delinquents. So this law should stay and tax collection organization has to be massively reformed. Internationally community is now pretty tired of funding Pakistan with it's taxpayers money when citizens of Pakistan do not pay their taxes

Haris Khan | 8 years ago | Reply Its a great step, we should support this law !!! Why don't theses trading associations tell traders to become filers !!! Such a shame that media is supporting them Its the first time the wholesale traders are being persuaded to come in tax net !!!

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abcd | 8 years ago | Reply This has to be handled on two fronts. Firstly, we have to let these people in govt know that taxpayer money is not their money. Stop wasting it on lavish living expenses and useless projects. Secondly, we have to increase the number of tax payers no matter what. It is unfair on the 8 lac or so current filers to bear the brunt of carrying the whole nation. Everyone should take part in building our country. People who are opposing this idea, fine, lets not do it this way. Please suggest how it should be done instead of just criticizing.

asad | 8 years ago | Reply @asad rizvi: you are very right in your thoughts, but talking personally, i dont trust govt. i dont want to spend my money in useless and inefficient projects like metro busses, which already are working on tax payers money and most probable go down in gutter after this govt. I remember KTC (karachi transport company)

asad rizvi | 8 years ago | Reply Imposition of 0.6 pct tax is a move in the right direction. A country that has a Tax to GDP ratio of around 9 pct and for decades has a deficit economy, which is totally dependent on foreign borrowings cannot survive because of lack willingness to impose tax on the elite of the society. The quantum of financial suffering to too big, by this I mean debt has reached Rs 18.6 Trillion. Annual debt financing is Rs 1.3 Trillion. In last 10-years, tax targets have hardly been achieved and has always been revised downwards. The curse is due to undocumented economy, as various governments of past and present preferred foreign borrowings instead of imposing tax on real income. The truth is that imposition of 0.6 pct withholding tax on all banking instruments will not only generate Rs 23 billion. More importantly, this measure will be the first step towards discouraging the evil practice of hiding funds and will help in documenting the economy and expose tax evaders. Concession would mean, more future misery for the nation, as liquidity shortage will never allow private sector growth and hence the economy will continue to rely on foreign borrowings. So wake up before we collapse !

A Peshawary | 8 years ago | Reply It is really shame that our bureaucrats and politicians like Dar (the Samdy of PM) comes up with innovative ideas to give drubbing to out performing sector of the economy. They are always short of ideas on the positive side whereas they come-up with brilliant suggestion on these type of issues a typical sub-continent business mind set (the Baniaz). It was the same regime which imposed Zai-Tax (zakat) in Zai era, on banking accounts. the business community must take into the account the mind set of the regime while tacking the issue. Dar, the leader of this mind, is a professional accountant and tax adviser always ready to give professional advise tax-evaders isn't he. A Peshawary

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