Business

Banking transactions: Take back the 0.6% withholding tax

Sabri said the increased reliance of the government on withholding taxes could become counterproductive

Our Correspondent July 05, 2015

PHOTO: FILE

ISLAMABAD:

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 5^th, 2015.

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COMMENTS (8)

Imran | 9 years ago | Reply Stupid decision of STUPID Government, should revert ASAP, Don't impose unnecessary Tax to people of Pakistan. Nawaz Ishaq, Zardari should clean their NAB cases. They have lotted and also did money laundering. Kush Sharm hoti hai kush Haya hoti hai but these people don't understand.

Imran Qureshi | 9 years ago | Reply 0.6% for non filers and 0.3% for filers. For filers there is no change. Those who are crying must file income tax at their earliest. They can even file zero tax return to become filer. Everything is online and you can do it from your home. What is the problem. Problem is tax evasion. Tax evaders do not want to pay tax. A poor person not eligible for income tax does not withdraw more than 50K in a day. Those drawing even 100K in a month can do it in 2 or 3 transactions to avoid this tax. All tax evaders will cry on the imposition of this tax. This should not be revoked. All should come under tax net. Those crying on this tax are either unaware how easy it is to become filer which has numerous advantages or they are tax evaders. There should be no soft corner for Tax evaders. I fully support this decision of sitting GoP.

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Ammar | 9 years ago | Reply In just 3 working days, we - bankers - come to know that people are reluctant to make any transactions via Banks. Even fillers were very reluctant to make payments, they got assurance that they won't be charged for the said tax, then made payments. One of client suggested that he is gonna open a Locker with Banks and will withdraw all his money from Banks with the daily limit ceiling of PRK 50,000/- and will keep the same in Locker. Govt. should revert its decision and devise some other mechanism for the fillers, why Banks have to suffer for the stupidity of government?

Khurram | 9 years ago | Reply Why already paid income tax be deducted again on banking transactions, who is running finance ministry, now it is obvious that these fellows will lead the country to a big crisis. Only stupid will keep their money in banks after this wrong decision and it looks like in few days, Pakistan will have situation like Afghanistan, Nigeria or Sudan where everyone will be keeping cash with them after mistrust on government policies and big trust deficit.

syed & syed | 9 years ago | Reply I fail to understand who teaches Mr Dar to take such stupid actions. This will result in cash transactions and which fool will keep his money in banks. It will have an added advantage to robbers and thieves in plain clothes or uniforms to take full advantage. Long live Dar keep it up and keep on making such silly rules. Is there any one who force the so called government leaders and politicians to bring their loot back to Pakistan. I hope Aian Ali will disclose the names if she loves Pakistan. She will be remembered in history in assisting in catching thieves

umar | 9 years ago | Reply This is absolutely ridiculous I am a 30 year old guy came back to pak from uk for the love of my country I brought all my savings to pak which is around 20 million rupees. Why should I pay this withholding tax on already taxed money. I am finding it extremely hard to start anything here on my own in karachi.

Umer | 9 years ago | Reply A foolish decision by government , it's aim is just to make IMF happy and people of Pakistan lives miserable . Why don't he first of all tax the whole parliament.

A Peshawary | 9 years ago | Reply A good decision to encourage black economy and plight of capital from the country; well-done sir keep it up. Only fools will keep their money in Pakistani banks. I am an expatriate working abroad; why should I keep money in my sons name in Pakistan? God bless Pakistan. Mr. Dar A highly prudent policy wherein the people who want to deal through banking channels are being kicked out because you cannot catch the tax-evaders so tax the ones who are doing legitimate banking transactions. The Nawaz government is trying to hide their incompetency in tax collection by raising tax on banking transactions. A Peshawary

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