The Large Taxpayer Unit (LTU) at Lahore and nine major Regional Tax Offices (RTOs) have failed to detect even a single withholding tax defaulter during first quarter (July-September) of 2010-11, reflecting highest level of non-compliance by the field formations.
Sources told Business Recorder here on Monday that most of the RTOs failed to detect any defaulter of withholding tax during the period under review. The FBR data showed that total number of taxpayer-in-default are detected as 1,849; amount of defaulted tax/additional tax recovered was Rs 332.647 million, and amount of penalty charged and recovered for default in furnishing of prescribed statement was Rs 4.559 million during this period.
It was noticed that major chunk of taxpayers-in-default detected lies in the RTO, Lahore which identified 1,544 defaulters. The LTU, Lahore, RTOs Sukkur, Faisalabad, Sargodha, Gujranwala, Multan, Abbottabad, Lahore-II, Rawalpindi, Peshawar have not identified even a single default of withholding taxes. This speaks of low priority accorded to this potential avenue of tax, the FBR report on enforcement/compliance by withholding agents added.
It is important to mention that withholding tax continues to be the leading source of direct tax receipts in view of the large undocumented sector of the economy. However, despite its large contribution, there is ample scope to enhance this collection further. The withholding tax collection during fiscal year 2009-10 was Rs 298.4 billion against Rs 242.1 billion during same period of last fiscal year, indicating a growth of 23.2 percent. The nine major withholding taxes contributed around 92 percent of total WHT collection. These are: contracts, imports, salary, telephone, export, bank interest/securities, electricity, cash withdrawal and dividends.
On the other hand, the highest growth in withholding collection has been from imports (66.8 percent), dividends (41.3 percent), salary (26.1 percent), bank interest (24.9 percent), electricity (21.7 percent), cash withdrawal (13.5 percent), contracts (13 percent), export (16 percent) and telecommunication (6.4 percent), etc. The highest growth registered in collection from import is due to rationalisation of WHT rate from 2 percent to 4 percent during 2009-10. Similarly, the reason of more than 40 percent growth in collection from dividend is due to increase in the profitability of companies. Likewise, growth of 26.1 percent from salary is mainly on account of increase in the salary of employees, the FBR added.
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