Regional Tax Office (RTO-II), Karachi has attached the bank account of Sindh Excise and Taxation (E&T) Department and recovered withholding tax amounting to Rs 861 million on Motor Vehicle Registration (MVR). According to sources, the federal government through Finance Act 2014 introduced the concept of filer and non-filer and fixed separate rates to distinguish them.
They said although the federal government had raised the rates of withholding tax for filers and non-filers under sections 231-B and 234 of Income Tax Ordinance 2001 through Finance Act 2014, the Sindh government failed to implement the same for seven months. The E&T department has given a rationale that they got the Chief Minister's approval for not enforcing revised WHT rates and the tax department was also informed that the issue would also be taken up at the Council of Common Interests (CCI).
In response to the said justification, the tax department has requested the E&T authorities to get legal advice before materialising any initiative. However, the E&T department has not only given lackluster response but also avoided involving its legal department in this matter. Resultantly, the MVR records have been attained from Sindh E&T department for further action.
Sources said the tax department, after acquiring the MVR details for the period July 2014 to October 2014, analysed all records on vehicle-to-vehicle basis to distinguish filer, non-filer and non-taxpayer. They said that there were different WHT rates from 800 cc to 3000cc for filer and non-filer and RTO-II, Karachi after tireless efforts raised the tax demand of Rs 861 million against E&T department for the period of four months (July-October 2014).
Moreover, sources said that the RTO-II, Karachi had issued couple of show-cause notices to the E&T department for the recovery of Rs 861 million but response remained negative from E&T department. Consequently, Deputy Commission Anees Memon with the approval of Commissioner Abdul Wahid Uqaily attached the consolidated funds account of government of Sindh under section 140(1) of Income Tax Ordinance 2001 and recovered Rs 861 million, pending for last eight months.
Replying to a question, sources said that E&T department had now implemented the revised WHT rates on MVR from February 2, 2015 hence RTO-II, Karachi would also recover the default payment of WHT for three months - November, December and January 2015, which was expected to accumulate around Rs 700 million.
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