Marriage halls, hotels, clubs etc in Karachi: Gross under-reporting of WHT detected

Directorate General of Intelligence and Investigation Inland Revenue (IR) has analyzed record of 31 marriage halls, marquee, hotels, restaurants, commercial lawns and clubs located in Karachi and detected gross under-reporting of withholding tax. Sources told Business Recorder here on Wednesday that the directorate had conducted sector analysis of marriage halls, commercial lawns etc in Karachi with reference to Section 236D of the Income Tax Ordinance, 2001
According to the directorate, the section 236D was inserted into the Income Tax Ordinance, 2001 through Finance Act, 2013. The newly-inserted section aims at deducting, by way of advance tax, an amount of 10 percent on the payment of food, service or facility by the prescribed person which includes the owner, a lease holder, an operator, or a manager of a marriage hall, marquee, hotel, restaurant, commercial lawn, club, a community place or any other place used for such purpose. However, a sample study of 31 such venues in Karachi revealed startling fact that almost all the prescribed persons have completely ignored statutory obligation resulting in loss of revenue and the departmental writ. Out of the given sample, only two (02) persons have deducted tax under section 236D which by all standards appears to be highly understated both in terms of number of functions held and amount charged.
It is proposed that the matter of non-compliance and gross under reporting by the marriage venues need serious consideration by the relevant field formations for which if deemed appropriate, concerned quarters at FBR may be apprised to collate and reconcile the generation of revenue country-wide, directorate added.