Withholding Tax on Bank Transactions to Stay at 0.3% Till February End
Finance Minister Mohammad Ishaq Dar, in his role as Economic Coordination Committee (ECC) chairman of the cabinet, has given approval to amend the withholding tax rate from 0.6% to 0.3% for non-filers who conduct banking transactions, till the end of this month, February 29th, 2016
Previously, the Finance Minister was adamant on raising the WHT rate to 0.6% on banking transactions made by non-filers of tax returns. After a rising chorus of pressure by traders and the business community nationwide, it seems that the move has been deferred for now.
If a person or association made a transaction using normal banking channels to the tune of Rs. 50,000 or higher, they’d be required to pay a levy of 0.3%, or 0.6% if the extension hadn’t come through.
The Federal Government, in powers vested in them by the Income Tax Amendment Act 2016, can amend the rate on WHT after prior recommendation of the ECC.
Mr. Dar, in his stead as ECC Chairman, also has the authority to extend the date for the filing of tax returns after the expiry of the current deadline. The move is aimed at Individual non-filers of tax as well as Associations of Persons, in a bid to expand the tax base of the country by bringing more registered tax-payers in the net.
Following this recent extension of deadline, traders can also file tax returns under the Income Tax Act 2016 (second Amendment) by the same date i.e. 29th February 2016. This is the last date to file returns, a move that has been undertaken to facilitate tax payers to the maximum.
Pakistan has long suffered from a low tax-to-GDP ratio, with the figure being 9.45%, one of the lowest worldwide. The government hoped to meet its revenue collection targets by enhancing the WHT rate on banking transactions over Rs.50,000 but the rising spate of pressure from the business community has appeared to stay the government’s hand for now.