The Federal Board of Revenue has started an exercise to check the interest paid on profits and tax withheld on cash withdrawal by banks under Income Tax Ordinance, 2001. Sources told Business Recorder here on Tuesday that the purpose of the exercise is to check the benchmark (minimum profit rates) and tax deducted thereon.
On explicit instructions of the FBR Chairman, Director General Withholding Taxes FBR Headquarters has started analysing data of the banking sector on the basis of random audit/sampling. The FBR wanted benchmarking of banking transactions and tax withheld there from. The FBR is taking these measures to increase withholding tax collection from banking sector. In this regard, Mrs Seema Majid, Director General Withholding Taxes FBR will visit Lahore and Multan.
In budget (2013-14), the rate of withholding tax on cash withdrawal from banks was also increased to 0.3 percent through Finance Act, 2013. Within the withholding taxes, the major share in the collection was from contracts/supplies (21.1 percent), imports (26.5 percent), salary (10.3 percent), telephone (8.7 percent), bank interest/securities (8.6 percent) and exports (4.9 percent) during first quarter of 2013-14.
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