Banks are reluctant to provide profit and debt statements and information pertaining to salaries of their employees to Large Taxpayers Unit (LTU), Karachi. This information was required to monitor withholding tax as per instructions of Federal Board of Revenue (FBR).
Sources told Business Recorder on Tuesday that banks had received notices for monitoring withholding tax. But they were of view that it would be intricate for banking sector to provide complete information regarding withholding tax in an accumulative way.Therefore, the representatives of these banks have raised the issue before the related tax officials.
They said that the decision in this regard would badly hit banking sector, which are already facing hardships because of global recession. They further said it would be a bright change that banks would loss credibility of their customers to maintain secrecy of their accounts.
According to the decision, banks have to make public all information pertaining withholding tax before related tax officials for monitoring. They said that banks had overseas branches where withholding tax provisions were not applicable, and banks were making payments, which were either exempt from tax or below taxation limits.
When contacted, concerned tax official to discuss the matter, he said that Income Tax Ordinance 2001 had empowered taxmen to ask for all related information to monitor taxes. He argued that banks had no reason to disagree with said decision because if they had no objection to provide complete details of any specific account holder, which also agonised their customer, why they were reluctant to practise same exercise in a broader way.
He said that cellular companies, which have customers in millions, were efficiently maintaining withholding tax statements without any objection. He, however, added that lack of co-ordination among branches; banks were facing immense difficulties to maintain consolidated withholding tax statement; hence they opposed the said decision.
He said that around Rs 40 million had been collected on account of withholding tax after effective monitoring of some nine branches of a reputed bank during the first quarter of current fiscal year, which paid only Rs 2million during last year's corresponding period.
When asked, how it was possible to monitor all information of each account holder to find the leakage of withholding tax, he said that representatives of banks should come forward to negotiate the matter to find the better way to overcome the issue. He said the department might initiate sample testing to monitor withholding tax after conferring the issue, and added that issues could only be resolved when both parties were on table with positive attitude, but without negotiation things became more complex.