Step needed: Withholding tax a nuisance for filers of returns

Every businessman must be brought into the tax net, urges official

ISLAMABAD: Islamabad Small Chamber of Commerce and Industry Patron Shahid Rashid Butt said that the government should bring into the tax net all those who avoid filing income tax returns. He further advised the government against the practice of charging 0.3% withholding tax on cash transactions over Rs50,000 indiscriminately.

In a statement, Butt said that every businessman must be brought into the tax net as per the government regulations, but imposing tax on the cash transactions of those who file their income tax, even though it may be refunded later, must be avoided since it may prove taxing in terms of time and effort of the business community and the FBR officials.

“The authorities must devise a mechanism to charge this tax from non-fillers, but they should refrain from charging the same on transactions of those who file the income tax returns,” said Butt.

“In order to adjust and refund the withholding tax paid by those who file their income tax returns a complicated process of paper work awaits the businessmen,” he added. “This not only restricts liquidity of a business, but also proves to be a nuisance in terms of the time and effort wasted by the traders and FBR authorities. In addition, this will promote bribe culture among the authorities due to numerous bureaucratic hurdles.”

He suggested that it would be more appropriate to exempt cash transactions from the 0.3% withholding tax for those who pay taxes. The bureaucratic hurdle of the refund process will not only cause further corruption within the officials, but may also lead to rising costs for the end consumers.

“If it is refundable, then why should the government’s resources and time of the business community be sacrificed when it doesn’t benefit either?” said Butt, adding that the government must develop a mechanism to bring the non-filler to the tax net without bothering those who already pay the taxes.

He said that as a spokesperson for the Islamabad Small Chamber of Commerce, he supports the government’s effort to bring non-filers into the tax net. “Every businessman must pay tax as per his income and business. They should not force the government into withdrawing a tax just so they can avoid paying their due tax,” Butt added.

Published in The Express Tribune, August 6^th, 2015.

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