The business community of South Punjab on Monday urged the government to immediately withdraw the imposition of 0.6 percent withholding tax (WHT) on all transactions for non-filers, as it would promote non-banking and cash transactions and would lead to harmful consequences for the economy. President of Multan Chamber of Commerce and Industry (MCCI) Mian Iqbal Hassan said the government has imposed advance adjustable income tax at 0.6 percent on all transactions of over Rs 50000 in a day for non-filers in a bid to compel them to become filers.
However, he apprehended that this decision would lead to many complications in the economy as it would cause a drop in bank deposits, promote the culture of cash transactions, affect the profit margins of taxpaying businessmen and enhance turnover tax for the filers. He said the increased reliance of the government on WHT could become counterproductive, as it would further give incentives to non-filers to conduct cash transactions and promote informal economy in the country.
He said the imposition of this tax would also raise inflation, as the non-filers would pass its burden to the common man who would pay high prices on purchases. He said that almost the whole business community of the country strongly opposed this new tax and the government should seriously consider its urgent withdrawal to avoid any disturbance to the business and economic activities. He said the government is already charging 0.3 percent withholding tax from banks on the transactions of Rs 50,000 and now the imposition of 0.6 percent tax on non-filers would push many businessmen towards the informal economy.
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