Chairman Federal Board of Revenue (FBR) Shabbar Zaidi has written a letter to heads of banks, specifying that the tax department would seek information about banks' customers through adoption of special procedures and format.
In a letter written to banking heads on Friday, the Chairman FBR stated, "at the outset he as the Chairman Federal Board of Revenue thank you personally and all the Presidents of the banks for a productive and result oriented meeting with them on November 27, 2019 in Karachi. As a result of that meeting unnecessary litigations pending for a long time at the High Courts have been amicably settled.
"We agree with the suggestion of PBA that there should not be any duplication with respect to the information to be furnished by the banks through Section 165 and now operative Section 165A of the Income Tax Ordinance, 2001.
The FBR will very soon issue instructions for the manner of furnishing information as required under Section 165 and 165A of the Income Tax Ordinance.
"It has been decided at Board level that such information should be asked for in the manner and form which in line with the systems and procedures adopted by the bank and FBR, if required will coordinate with you and banks for designing such formats.
"It is further decided that a special procedures will be instituted within FBR information system that such information is used only for the purposes required under the law and all the taws and regulations are complied with.
IPS/Trust Activities: As per our understanding banks undertake IPS/Trust activities under certain regulations which allow the banks such activities on behalf of their customers Information in this respect is duly incorporated as an 'Off Balance Sheet Item' in the Financial Statement of the banks.
"It is fully appreciated that bank's role is only that of a 'trustee' in such cases, Nevertheless as you are aware that substantial activities are undertaken on this account and three parties are involved in the transactions viz State Bank of Pakistan- concerned bank and the customer. It is our view that information about such transactions is with the bank therefore banks would be the suitable/approachable entity from which such information can be sought.
"Nevertheless, we will be grateful if we are guided-apprised on this matter. Our only objective is to ensure that tax withholding and other compliance procedures are properly accounted for in such transactions:
Withholding Under Section 151 of the Income Tax Ordinance: We have taken notes of the views expressed on this matter and in our view the best way to proceed further with respect to the matter of withholding under Section 151 of the Income Tax Ordinance, 2001 would be constituting a high level committee representing the following to decide the future course of action.
"Our suggestions for the members of the Committee are:
1. Member Inland Revenue Policy-FBR
2. Chief Commissioner Large Tax Payers' Unit, Karachi
3. CEO/Secretary General Pakistan Banks Association
4. Three Presidents of the Banks representing various tiers.
We suggest you to provide the names of the Presidents to be nominated to the committee which will be notified accordingly 7 Committee shall decide the matter within a month and provide recommendations for future course of action."
Copyright Business Recorder, 2019
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