New return filers still forced to pay WHT
FBR delays communication to bank headquarters about taxpayers
FBR delays communication to bank headquarters about taxpayers. PHOTO: AFP
ISLAMABAD:
Reports emanating from the banking sector suggest that the Federal Board of Revenue (FBR) has become a source of dismay for the new tax return filers as it has failed to regularly provide the data that will exempt the taxpayers from payment of 0.3% withholding tax (WHT) on banking transactions of over Rs50,000 in a day.
Headquarters of different banks have not received verification from the FBR in this regard and that is why customers are forced to pay the withholding tax which otherwise should not have been the case.
Post-withholding tax: People reduced using cheques to avoid levy
Each time businessmen receive the electronically-generated text message about tax deduction they rush back to the bank and insist that they should be exempted according to the country’s laws.
According to some of these businessmen, bank managers explain that their bank accounts have been updated with the National Tax Number (NTN), the certificate of compliance and the tax they paid, but they have not been recorded as taxpayers only because headquarters of the banks have not got the required communication.
In this case, their data could not be updated even after the receipt of compliance certificates from the tax offices. Banks cannot confirm tax compliance on their own.
Businessmen have also approached relevant officials of the FBR, but to no avail. One of them quotes the tax officials as saying that compliance reports will soon be sent to the bank headquarters. “We are running between the FBR and the bank headquarters, but so far it has not borne fruit,” he says.
Campaign evokes suspicion
Trade leaders say the apathy of FBR officials, who have spent billions of rupees on a campaign to bring businessmen into the tax net, has forced them to view the tax compliance drive with suspicion.
Latest tax measure: Holding protests against withholding tax
“If they cannot communicate to the bank headquarters, why should a businessman trust them by paying tax,” asks a trader.
“They blame bank headquarters for the delay in releasing such information to their branches, but when we approach the banks, they pass the buck on to the FBR.”
The continued withholding tax deduction from bank accounts, he says, has discouraged other traders that were considering coming into the tax net under the Voluntary Tax Compliance Scheme. This scheme is meant to push hundreds of thousands of traders to file tax returns but it has so far proved to be ineffective.
The FBR has repeatedly been assuring the trading community that it will not be harassed or forced to face losses if they responded positively to the scheme. However, the traders do not trust the FBR keeping in view their past experience.
“This is not the first time that such thing is happening, whenever our headquarters writes to the FBR to confirm whether an accountholder is a tax return filer or not, there is slack or no response at all,” a banker comments.
FBR defends itself
FBR officials, on their part, argue that the data from field offices takes time before it reaches the FBR headquarters for analysis and approval.
After the analysis is done, they say, the NTN is issued. Following this, a confirmation notice of compliance is communicated to the relevant bank. They point out that the office of each income tax commissioner has a complaint section where taxpayers can record their grievances, if any.
Second quarter: FBR tops tax collection target by Rs35 billion
About expediting the process, they say work remains continue without any hindrance and tax compliance can be confirmed on a case-to-case basis.
The writer has worked with major newspapers and specialises in the analysis of public finance and geo-economics of terrorism
Published in The Express Tribune, March 21st, 2016.
Reports emanating from the banking sector suggest that the Federal Board of Revenue (FBR) has become a source of dismay for the new tax return filers as it has failed to regularly provide the data that will exempt the taxpayers from payment of 0.3% withholding tax (WHT) on banking transactions of over Rs50,000 in a day.
Headquarters of different banks have not received verification from the FBR in this regard and that is why customers are forced to pay the withholding tax which otherwise should not have been the case.
Post-withholding tax: People reduced using cheques to avoid levy
Each time businessmen receive the electronically-generated text message about tax deduction they rush back to the bank and insist that they should be exempted according to the country’s laws.
According to some of these businessmen, bank managers explain that their bank accounts have been updated with the National Tax Number (NTN), the certificate of compliance and the tax they paid, but they have not been recorded as taxpayers only because headquarters of the banks have not got the required communication.
In this case, their data could not be updated even after the receipt of compliance certificates from the tax offices. Banks cannot confirm tax compliance on their own.
Businessmen have also approached relevant officials of the FBR, but to no avail. One of them quotes the tax officials as saying that compliance reports will soon be sent to the bank headquarters. “We are running between the FBR and the bank headquarters, but so far it has not borne fruit,” he says.
Campaign evokes suspicion
Trade leaders say the apathy of FBR officials, who have spent billions of rupees on a campaign to bring businessmen into the tax net, has forced them to view the tax compliance drive with suspicion.
Latest tax measure: Holding protests against withholding tax
“If they cannot communicate to the bank headquarters, why should a businessman trust them by paying tax,” asks a trader.
“They blame bank headquarters for the delay in releasing such information to their branches, but when we approach the banks, they pass the buck on to the FBR.”
The continued withholding tax deduction from bank accounts, he says, has discouraged other traders that were considering coming into the tax net under the Voluntary Tax Compliance Scheme. This scheme is meant to push hundreds of thousands of traders to file tax returns but it has so far proved to be ineffective.
The FBR has repeatedly been assuring the trading community that it will not be harassed or forced to face losses if they responded positively to the scheme. However, the traders do not trust the FBR keeping in view their past experience.
“This is not the first time that such thing is happening, whenever our headquarters writes to the FBR to confirm whether an accountholder is a tax return filer or not, there is slack or no response at all,” a banker comments.
FBR defends itself
FBR officials, on their part, argue that the data from field offices takes time before it reaches the FBR headquarters for analysis and approval.
After the analysis is done, they say, the NTN is issued. Following this, a confirmation notice of compliance is communicated to the relevant bank. They point out that the office of each income tax commissioner has a complaint section where taxpayers can record their grievances, if any.
Second quarter: FBR tops tax collection target by Rs35 billion
About expediting the process, they say work remains continue without any hindrance and tax compliance can be confirmed on a case-to-case basis.
The writer has worked with major newspapers and specialises in the analysis of public finance and geo-economics of terrorism
Published in The Express Tribune, March 21st, 2016.