FBR warns bankers on online transfers

FBR has informed the PBA that the online transfer of funds cannot be termed “cash deposited into bank account.”

ISLAMABAD: The Federal Board of Revenue (FBR) has informed the Pakistan Banks Association (PBA) that the online transfer of funds cannot be termed “cash deposited into bank account” and withholding tax is deductible at the time of transfer.

The tax applies to the transmission of any sum of money above Rs25,000 through online transfer, telegraphic transfer, mail transfer or any other mode of electronic transfer.

This was said in a clarification sent to the PBA by the FBR which referred to the relevant provisions of the Income Tax Ordinance, 2001.

It clarified that the PBA’s perception that such online transfers can be treated as “cash deposited into bank account” is not correct. The FBR had earlier addressed a letter to the PBA secretary elaborating this situation, the FBR claimed.

The tax is levied at 0.3 per cent and is not deductible on deposits of cash into a bank account and on inter-bank transfers of money.

Published in The Express Tribune, September 4^th, 2010.