Commercial vehicles: E&T Department asked to make payment of Rs 1.58 billion WHT

Regional Tax Office (RTO) Karachi-III has served a notice on Excise & Taxation Department (Motor Registration Wing), Karachi for recovery of Rs 1.58 billion withholding tax on account of non-deduction of the tax on new rates applicable on goods transport and passenger vehicles plying for hire (commercial vehicles). Sources told Business Recorder here on Wednesday that the Chief Commissioner RTO-III Karachi has submitted a report to the FBR Directorate General Withholding Taxes, Islamabad.
According to the report, intelligence gathered pertaining to the Excise & Taxation Department (Motor Registration Wing), Karachi revealed that withholding tax was still being collected and deposited to the Federal Treasury on old rates. To confirm that changes brought in law (enhancing the rates of collection) through clause 56 of the Finance Act, 2012 (Act XVII of 2012) were duly being adhered to, an audit team was constituted to conduct audit of the said Department.
The said audit team conducted audit of the office of the Director, Excise & Taxation Department, (Motor Registration Wing) Karachi on March 18-19, 2013 and accordingly submitted its finding. The findings said that the tax in respect of goods transport and passenger vehicles plying for hire (Commercial Vehicles) was still being deducted/deposited on old rates. Secondly, the amendment brought in law through the above referred Finance Act duly published in Gazette of Pakistan on June 27, 2012, had been altogether ignored by the said department and as such heavy loss of revenue had occurred.
The report said that consequently a show cause notice dated March 19, 2013 has been issued and served upon the Director, Excise & Taxation Department (Motor Registration Wing), Karachi, treating him as Representative in terms of section 172(1)(d) of the Income Tax Ordinance, 2001 and further treating him as defaulter under section 161/205 of the said Ordinance. Compliance to the show cause was due on March 27, 2013 and order shall accordingly be passed to recover an amount of Rs 1.058 billion including principal amount of Rs 987.102 million and default surcharge of Rs 161.478 million, it added.