Banking transactions: Take back the 0.6% withholding tax
PHOTO: FILE
Local traders have urged the government to immediately withdraw the 0.6% withholding tax on all banking transactions imposed on non-filers.
They said the tax will discourage banking transactions and instead, promote non-banking and cash transactions, which will have harmful consequences for the economy.
The government has imposed advance adjustable income tax at a rate of 0.6% on all banking transactions of over Rs50,000 in a day for non-filers in a bid to compel them to become tax return filers.
Islamabad Chamber of Commerce and Industry (ICCI) President Muzzamil Hussain Sabri said the decision will lead to many complications and it will cause a drop in bank deposits, promote the culture of cash transactions, affect profit margins of taxpaying businessmen and enhance turnover tax for filers.
Sabri said the increased reliance of the government on withholding taxes could become counterproductive as it will further incentivise non-filers to conduct cash transactions and promote informal economy.
Published in The Express Tribune, July 5th, 2015.