Countrywide protests continue: Unfazed government to keep charging 0.6 percent WHT for a year

Despite countrywide protests against 0.6 percent tax at all banking transactions, the government appears steadfast in implementing advance adjustable tax on banking transactions of non-filers for at least a year; it is learnt here on Tuesday. According to sources, finance minister Ishaq Dar was going to meet the business community on July 8, 2015 (today) to discuss issue related to 0.6 per cent advance adjustable tax to be collected from non-filers on all banking transactions under section 236P of the Income Tax Ordinance 2001.
Replying to a question, sources ruled out the possibilities of withdrawal of said levy, saying that the meeting was only aimed at pacifying the agitations of the traders, who were planning to go on strike against the said tax deduction. They said that government was not in a mood to withdraw this levy but its rate may be reduced to 0.3 or 0.4 per cent. Moreover, sources said that team of tax managers from finance department and Federal Board of Revenue (FBR) had weighed all pros and cons of section 236P for two months before it was enacted.
They said that records of banking transactions, obtained from State Bank of Pakistan (SBP), showed trillions of rupees transactions. Sources said that records had closely been reviewed after exclusion of government to government and bank to bank transactions that led the proposal of insertion of section 236P in Income Tax Ordinance, 2001.
Furthermore, sources said that although this section had been introduced to encourage documented economy, its revenue impact was estimated to around Rs 100 billion approximately. Therefore, it can not be withdrawn, despite nation-wide protests being staged by the business community.
When contacted, Shahid Hussain Asad, member tax policy and spokesman of FBR said that advance adjustable tax would neither be withdrawn nor reduced from 0.6 per cent to 0.3 or 0.4 per cent as it had now been a part of Act and FBR had no power to issue SRO for its withdrawal or for reduction in its rate. Moreover, he said that its implementation could only be averted, if President of Pakistan could pass presidential ordinance, which required approval from parliament after 3 months or 90 days.
Member Tax Policy by all these rationales made it clear that 0.6 per cent advance adjustable tax on banking transactions of non-filers had been enforced from July 1, 2015 for at least a year as it could only be withdrawn through next Finance Act. Needless to mention, after the insertion of section 236P in Income Tax Ordinance 2001, the financial institutions are required to collect advance adjustable tax from a non-filer at the time of sale of any instrument, including demand draft, pay order, special deposit receipt, cash deposit receipt, short term deposit receipt, call deposit receipt, rupee traveller's cheque or any other instrument of such nature from July 1, 2015 at the rate of 0.6 per cent.
This tax is also applicable on a non-filer at the time of transfer of any sum through cheque or clearing, interbank or intra bank transfers through cheques, online transfer, telegraphic transfer, mail transfer, direct debit, payments through internet, payments through mobile phones, account to account funds transfer, third party account to account funds transfers, real time account to account funds transfer, real time third party account to account fund transfer, automated teller machine (ATM) transfers, or any other mode of electronic or paper based funds transfer.