KARACHI: Withholding income tax collection from non-cash banking transactions increased 10 percent during the first five months of the current fiscal year owing to accelerated economic activities following the lifting of the coronavirus lockdown, sources said on Thursday.
The collection of withholding tax on non-cash banking transactions increased to Rs3.3 billion during first five months of the current fiscal year. That was compared with Rs3.01 billion in the corresponding months of the last fiscal year, according to official statistics of Large Taxpayers Office Karachi.
The sources said the economic activities restored during the period after lifting of coronavirus lockdown and the banking system witnessed significant transactions.
Deposits of the banking system witnessed 18 percent growth to Rs16.8 trillion by end of November. That was compared with Rs14.3 trillion in the same month of the last year.
The sources said withholding tax was imposed on non-cash banking transactions by individuals who didn’t file their annual income tax returns and were not on the active taxpayers list (ATL).
The withholding tax on non-cash transactions is applicable at 0.6 percent on taxpayers who do not appear on the ATL. Despite significant increase number of active taxpayers the withholding tax collection registered handsome growth.
The number of return filers for tax year 2019 increased to a record high of 3 million. The ATL for tax year will remain applicable till February 28 next year for the purpose of deduction of withholding tax under various provisions of the Income Tax Ordinance 2001. The number of return filers in tax year 2018 was around 2.9 million.
The government introduced the withholding tax provision through the Finance Act 2015 and a new section (236P) was inserted to Income Tax Ordinance 2001. The provision was aimed at increasing the burden on non-filers.
The collection of withholding tax on non-cash banking transactions witnessed an increase of three percent to Rs640 million in November. That was compared with Rs624 million in the same month of the last year.
The sources said contraction in collection growth was due to second wave of coronavirus. Although economic activities were not halted as was in the first phase, many businesses were not performing to their optimum level due to work-from-home orders.
Source: The News