ISLAMABAD: Seven leading banks have deposited over Rs 4.2 billion withholding tax following withholding tax audit of banking sector by the Directorate General of Intelligence and Investigation, Inland Revenue. Sources told Business Recorder here on Thursday that the LTU Karachi has successfully managed to recover a huge amount of around Rs 4.2 billion from seven banks as per data of the directorate of intelligence IR maintained up to June 30, 2011.
These banks have admitted default of withholding tax under Income Tax Ordinance 2001 and deposited Rs 4.2 billion to the exchequer including the amount deposited on June 30, 2011. According to sources, one of the banks has deposited Rs 2.2 billion by admitting default of withholding tax following detection through audit by the LTU Karachi. Another bank has deposited an amount of Rs 1.4 billion as withholding tax in the exchequer.
The updated data compiled by the DG Intelligence Inland Revenue on June 30, 2011 revealed that different banks falling within the jurisdiction of LTU Karachi have deposited a total of Rs 4.2 billion to the national kitty. The bank-wise data revealed that a bank has deposited Rs 240 million, another bank Rs 150 million while LTU Karachi also recovered Rs 170 million from a bank. The data disclosed that a leading bank has also deposited Rs 93 million as withholding tax on account of default of withholding tax provisions of the Income Tax Ordinance 2001.
The DG Intelligence IR had detected flaws in deduction and collection of withholding tax from banks during monitoring of the banking sector in 2010-11. Resultantly, the LTUs conducted audit of banks under the supervision of Shahid Hussain Asad Director General, Directorate of Intelligence and Investigation, Inland Revenue. The directorate had raised huge income tax demands against the banks for committing default of withholding tax.
The directorate had found that certain banks are not properly filing the complete and proper statements. Secondly, the vital/relevant information is not being enforced. Thirdly, the regulatory provisions (Rule 43) regarding payment of taxes withheld are not being monitored by the concerned authorities. Fourthly, there are physical limitations of withholding audit by the tax department. Fifthly, the Regions get monthly collection and LTUs get quarterly statements, which are mutually irreconcilable. There are reconciliation problems in the said data of statements. The directorate further stated that the cases of non-withholding pointed out by internal audit of banks are not shared with tax department for recovery purposes. It has been further observed that the tax deducted is not deposited in time by the banks. The agency has also observed that banks are not properly filing statements under section 231A/231AA of the Income Tax Ordinance 2001, sources added.