Bank transactions: FPCCI chief seeks withdrawal of 0.6 percent WHT

Federation of Pakistan Chambers of Commerce and Industry (FPCCI) President Mian Muhammad Adrees has urged Prime Minister Nawaz Sharif and Finance Minister Senator Ishaq Dar to withdraw 0.6 percent WHT on banking transactions. He said that it would hamper business activities, which would consequently reduce the country's exports.
He said it was surprising that the banking sector had not yet been provided the list of non-filers on whom the WHT was applicable. Similarly, he added that the FBR's data in this regard was also not updated. Adrees said that the banks were deducting 0.6 percent WHT from all customers irrespective of whether they were filers or not. "The FBR should have shared with banks the data of filers and non-filers prior to imposition of such tax," he added.
He was of the view that such taxes were not advisable for low income economies like Pakistan, where the per capita income was around $1300. He pointed out that the volume of banking transactions of over Rs 6 trillion annually should not be linked to all non-filers, which also included the transactions of tax-filers, widows, pensioners, lower cadre employees and other poor segment.
He said that the decision would lead to shrinking of banking deposits, as people would keep their money either in hard cash or in the shape of gold to avoid tax. Adrees regretted that tax payers all over the world were honoured but in Pakistan the tax payers were being victimised. He emphasised the need of broadening tax net instead of burdening the existing tax payers.
Meanwhile, Chairman, Standing Committee on Banking, Credit and Finance, FPCCI, Dr Mirza Ikhtair Baig, has urged the Finance Minister to settle the issue in consultation with the business community. He also urged the Prime Minister to withdraw 0.6 percent WHT on all banking transactions of non-filers of income tax returns. He said that the uncertainty had paralysed business activities in the main commercial markets.
Dr Baig said that the business community supported the government efforts towards documentation of economy but that should be done through broadening of tax net. "The imposition of WHT will promote the culture of cash dealings through non-banking channels and polarisation in the country which will promote grey parallel economy," he observed.