Withholding Tax is directly hitting organised and disciplined sector of the country and it would revive and promote the "Hundi" and Hawala" system, direct transaction and cash payment, said Muian Iqbal Hassan President of Multan Chamber of Commerce and Industry.
The business community of South Punjab on Sunday called upon the government to immediately withdraw the imposition of withholding tax (WHT) on all banking transactions for non-filers, as it would discourage banking transactions, promote non-banking and cash transactions and would lead to harmful consequences for the economy.
Mian Iqbal Hassan said the business community has also rejected the 0.3 percent (reduced) withholding tax on all banking 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 give rise to 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. Mian Iqbal Hassan said the levy of WHT on non-filers would also affect the objective of financial inclusion. He termed it unfortunate that the government did not take business community on board before imposition of this new tax and stressed that it should shun the practice of taking unilateral decisions.
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