Business

Contrary to traders' claims: WHT has not affected bank deposits, says SBP governor

Govt’s meeting with traders ends in deadlock, main representatives not present

Our Correspondent July 29, 2015

PHOTO COURTESY: NEW PAKISTAN

ISLAMABAD:

Amid gridlock between traders and the government over the issue of withholding tax (WHT) on banking transactions, State Bank of Pakistan Governor Ashraf Wathra said on Tuesday that the central bank has not witnessed any major variations in the deposit base of banks.

Wathra’s statement negates the claim of traders who said that depositors have started withdrawing cash from banks after the imposition of 0.3% tax on every banking transaction.

“So far, the central bank has not witnessed any major variations in deposit volumes of the banking sector in the aftermath of imposition of WHT on all banking transactions,” said Wathra while talking to journalists after attending a meeting of the Senate Standing Committee on Finance.

However, the governor maintained that it was premature to give any judgment on the impact of imposition of WHT on banking transactions due to Eid holidays. He said that the central bank was closely monitoring the banking sector.

Meanwhile, the government’s efforts to resolve the dispute with traders sustained a serious setback when the mainstream leadership of the business community boycotted Tuesday’s meeting that the government had convened.

Neither Finance Minister Ishaq Dar attended the meeting nor did representatives of the All Pakistan Anjuman Tajaran come to attend the session that had been called on Tuesday morning in the Federal Board of Revenue’s Headquarter. The traders’ boycott suggests that they would go ahead with their plan to observe a strike on August 1.

Only district level representatives of the traders attended Tuesday’s meeting who too were the office-bearers of the ruling PML-N. The government presented them to the media as representatives of traders.

“It is a golden opportunity for the traders to resolves all outstanding issues, as the PML-N government has a soft corner for traders,” said Special Assistant to Prime Minister on Revenue, Haroon Akhtar Khan.

Khan warned that if traders missed this chance, they may face problems in the future as the government is going to pass a law to forbid having benami bank accounts.

The benami accounts are maintained by politicians, bureaucrats and business community in the names of their employees and other relatives to keep their assets outside the formal economy.

Khan said the government has constituted three committees to address the genuine issues of business community. The committees have been formed to address concerns about income tax, sales tax and a committee on communication has also been setup to reach out the traders, he added.

Khan said that these committees would submit their reports by August 14, which will become the base for taking a decision. The special assistance to the premier hoped that the traders would end boycott and start participating in the deliberations.

There was trust deficit between traders and the government and that has to be bridged, said Parliamentary Secretary Finance Rana Muhammad Afzal.

Published in The Express Tribune, July 29^th, 2015.

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COMMENTS (11)

Xnain | 9 years ago | Reply @Saeed Mirza: But how why would you risk handling transactions in cash rather than filing your tax-return?

Umar Khan | 9 years ago | Reply @Overseas Pakistani: Don't draw more than 50,000 per day. You can distribute your withdrawal on different dates and it can be easily managed. Or you should file nil income tax return. Actually, the main targets are traders and those persons who earn a lot and do not file tax returns.

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Cobra Commander | 9 years ago | Reply @Overseas Pakistani: Any check in excess of rs 50,000 will result in WHT. This is how its going to work. Banks will have access to FBR database and vice versa. Banks will check with the FBR database if a person has filed taxes or not and then act accordingly. For overseas pakistani some additonal documents will have to be provided and they will be exempted from this tax. Banks will have to design systems to implement WHT. Some banks are not even ready for it as yet. But please understand these traders indulge in under invoicing and even smuggling but pay nothing on their incomes and yet demand excellent roads network and round the clock electricity. Its this huge mafia which the government is after.

Overseas Pakistani | 9 years ago | Reply Agreed - this tax is not on remittances. But the moment I use this remittance money to issue any cheque or pay order, they will deduct this w/tax. The savings in my bank account comprises of this remittance money which is exempt from taxes - so why do I have to pay this w/tax?. They should categorize this w/tax imposition based on whether the money is exempt from tax or not. If they don't do this, majority of overseas Pakistanis who keep their savings in Pakistani banks will avoid sending remittances and would rather keep it in their host countries bank accounts or where there is no such stupid kind of tax.

Cobra Commander | 9 years ago | Reply @Overseas Pakistani: This tax is not on remittances , only on local transactions exceeding Rs50,000. Ministry of commerce website has information on it.

H.A. Hussain | 9 years ago | Reply FBR should not back off .These so called traders are tax evaders.FBR should publish the area wise names of traders who file returns and the tax they have paid and turnover they have declared.This information is already in Tax Payer Directory so all FBR will be doing is preparing area wise information.What is the legal or moral justification for traders not to pay taxes and not filing their return of income?.They are law breakers those who do not file their return of income. This is defining moment for Pakistan and Government should take a stand and the traders have to pay taxes according to law.

pakistani | 9 years ago | Reply @Overseas Pakistani: No, i am an overseas paksitanis as well and have already withdrawn my money from the 2 bank account. I will urge all the paksitanis to do the same. Thinking of other means like hundi to transfer money back to the country. These thieves from PML(N) shouldn't get my hard earn money. @Saeed Mirza: you have done the right thing. And for all those nooras who are supporting their father nora, shame on you. No where in the world we have this WHT. If you want to get more people in taxes, do it with proper means and not come up stupid ideas from that munshi Ishaq Dollar.

Overseas Pakistani | 9 years ago | Reply I am an overseas Pakistani and have been keeping my savings in my Pakistani bank account. As far as I know, my remittances are exempt from Income tax, hence I don't pay any tax and no income tax returns. Why this w/tax should be levied on my savings that I am keeping in my account? Is there any waiver for overseas Pakistanis from this w/tax? Appreciate if someone could clarify.

Sami | 9 years ago | Reply It's wrong to call them All Pakistan Traders Association, this is all Pakistan Tax Evaders Association. This tax is applicable to only those who do not file a tax return. Everyone needs to file a return and pay taxes. Govt should not give in to their demands. Dealing in cash is an empty threat that is practically not possible for significant transactions.

Cobra Commander | 9 years ago | Reply @Saeed Mirza: This shows that you have not filed your taxes ever because if you file your taxes than you do not have to worry aboUT WHT. I pay taxes on my "hard earnings" whats stopping you from doing the same?

Saeed Mirza | 9 years ago | Reply To save my hard earnings from WHT i have withdrawn my hard cash of 5 Million from my bank account and kept it in the lockers. Similarly there are many traders who are withdrawing money from their Bank Accounts and placing it in lockers.

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