KARACHI: The Federal Board of Revenue (FBR) nudged banks into furnishing details of accounts that are fed with Rs10 million or more in a month, aiming at to broaden the tax base, officials said on Wednesday.
The tax officials said the FBR directed all the banks to provide details of accounts that were credited with Rs10 million or above in a month. They said the FBR, in an official letter sent to banks, asked them to provide such details for July and August.
“The purpose of obtaining details is to identify people who make large transactions, yet they are out of the tax net,” an official said, requesting anonymity.
The tax officials said the threshold of deposits for providing information was raised to Rs10 million from one million rupees.
An official at Large Taxpayers Unit (LTU) Karachi said the requirement of financial information is not just for two months and also applicable on previous transactions.
“But, the banking companies are reluctant to share information of their account holders,” the official said. “The matter is with the higher court.” The tax official said the banks should now find it easy to furnish details after increase in the threshold.
The official said banks were required to provide a list containing particulars of deposits aggregating one million rupee or more during a month, prior to amendments into a law through Finance Act 2018. The amendment was made into Section 165A of Income Tax Ordinance 2001 under which banks are required to provide particulars of deposits aggregating Rs10 million or more in a month.
The official said another amendment was introduced into the ordinance to obtain information of individuals spending through credit cards. “Banks are also required to provide details of individuals making payment of above Rs200,000 in a month through credit cards,” the official added. Tax officials said banks were asked to provide details, along with withholding statements, of credit cardholders for the July and August transactions.
The official said monthly spending threshold for credit card was also increased to Rs200,000 from Rs100,000.
The official said banks were bound to give FBR an online access to their main database before the budget 2018/19. The government, however, revoked the privilege from July 1 to maintain privacy of accountholders. Tax officials said data obtained from banks will be shared with other tax offices to broaden tax base.
FBR is struggling to increase number of filers of tax returns. With all its penalties on non-filers, the apex tax authority has been able to aggregate only 1.57 million filers on its active taxpayers list (ATL) in the country of 200 million people.
The FBR officials said the law was introduced to create deterrence against the habit of late filing and discourage frequent extension of time limit. The last date of filing returns for tax year 2018 is falling on September 30 and the FBR has already warned that it would erase late filers from ATL.
(This news/article originally appeared in The News on September 27th, 2018)