KARACHI: Withholding tax collection from non-cash banking transactions declined 15 percent to Rs1.53 billion in the first two months of the current fiscal year of 2018/19, as numbers of returns filers are increasing, officials said on Tuesday.
The withholding tax collection amounted to Rs1.8 billion in the corresponding months of the last fiscal year.
Tax officials attributed the fall to the measures taken by the government to encourage declaration of assets and filing of annual returns.
The population of return filers increased to around 1.56 million by August 31 from 870,000 in 2013.
The government, in the budget for the current fiscal year, made returns filing mandatory for purchase of motor cars and transfer and real estate amounting more than five million rupees.
The previous government introduced Section 236P into the Income Tax Ordinance 2001 and imposed withholding tax on individuals making online or non-cash banking transactions. The restriction imposed under this section was only for non-filers. The withholding tax rate was introduced at 0.6 percent but on the demand of business community the government reduced the rate at 0.4 percent in the last budget.
Officials said a number of provisions were introduced into the ordinance to make it difficult for non-filers to make transactions. They said the tax collection under this head would gradually decline as a large number of individuals are filing annual returns.
A tax official said late return filers will not get their names in the active taxpayers list (ATL) from the tax year 2019 onwards under a new law. The appearance in the ATL is mandatory to avail the reduced rate of withholding tax.
“The newly-introduced provision will substantially increase the number of return filers,” the official added.
The impact of new laws, including restriction related to property and car buying, was evident in August as WHT collection from non-cash transactions declined to Rs762 million during the month compared to Rs1 billion in the corresponding month a year earlier, posting a 24 percent decline.
Sources in Large Taxpayers Unit, Karachi said the unit, however, sought details of non-cash transactions from banks to examine the sharp fall in tax collection in August.
(This news/article originally appeared in The News on September 12th, 2018)