The Federal Board of Revenue (FBR) will analyse data of the State Bank of Pakistan (SBP) for improving withholding tax collection from cash withdrawal from banks during 2008-2009.
According to the revised Standing Operating Procedure (SOP) issued by the FBR on Thursday, Section 231 of the Income Tax Ordinance 2001 envisages every banking company to deduct tax @ 0.3 percent for withdrawal of cash from banks.
On account of cash based economy, a large number of bank transactions are made in cash. Against this, the amount of tax deducted and transactions reported by the banks is abysmally low, perhaps on account of multiple transactions below the bench mark.
It would be appropriate to collect information from SBP and other banks and hold an analysis of withdrawals and tax deducted, the FBR said. The statements should also be enforced, as present level of compliance is low.
The banks deposit tax through composite challans and do not furnish particulars of the account holders. The FBR said that the examination of some of the bank accounts have indicated short deductions. The accounts thus need to be examined. The income tax department should check the large withdrawals from banks on sample basis to ascertain the direction of money towards various sectors and for taking further necessary action as per law, the FBR added.
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