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In the Federal budget 2005-2006 the Finance Minister announced in his speech that a new section has been proposed to be added to the Income Tax Ordinance to widen the scope of tax net. The newly-inserted section 231 is reproduced as under.
"23lA cash withdrawal from a Bank - 1) every banking company shall, at the time of making a payment for cash withdrawal exceeding 25,000 deduct tax from the payment at the rate specified in Division VI of Part IV of the First Schedule."
In this connection CBR has directed all the commercial banks and financial institutions of the country that 0.1 percent withholding tax collected on cash withdrawal exceeding Rs 25,000 must be deposited in the Federal Treasury within seven days of collection.
CBR further informed all banks and financial institutions to collect 0.1 percent withholding tax from 1.7.2005 and warned that any violating "person" of the bank branch would face action from the Income Tax Department under Section 161 of the Income Tax Ordinance.
I think this is quite harsh, practically impossible, unrealistic and inhuman section which has been inserted by the CBR in budget. Pakistan is the only country in the world where more than a dozen times tax is being collecting from one person.
For example a salaried person is paying income tax at an appropriate rate as specified by CBR in Income Rules on his salary before getting from his employer. He is paying withholding tax on his utilities ie electric, telephone, gas bills. Further he is paying sales tax on various commodities when purchased for daily use.
Similarly taxes on petrol, diesel are directly hitting the salaried persons. If imposition of such tax was necessary then salaried persons, both government employees or working in private sector, should have been exempted from such levy. Further if CBR still insists that this was necessary as without which Pakistan (Almighty Allah may save us) would be on the verge of collapse then persons drawing more than Rs 25,000/- should be exempted from levy of such tax subject to production of his NTN being a proof that the person is already a tax-payer.
I request the worthy Prime Minister, Finance Minister and CBR Chairman to reconsider this harsh section and issue order for immediate withdrawal of this section from the Income Tax Ordinance. Due to introduction of such section the bank staff is also facing much difficulties and they are facing great problem in deducting withholding tax and maintaining such account.

Copyright Business Recorder, 2005

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