The Federal Board Revenue has issued updated Standard Operating Procedure (SOP) for monitoring of withholding tax to ensure their collection under amended provisions of the Income Tax Ordinance 2001 as per Finance Act 2011.
Sources told Business Recorder here on Monday that Sardar Aminullah Khan Member (Enforcement & Accounting) in the FBR Headquarter has reviewed the old SOP on withholding tax and issued a new SOP to guide and facilitate the withholding agents and department for proper deduction and collection of withholding tax.
Aminullah has brought the SOP in line with the changes made in the Income Tax Ordinance 2001 through Finance Act 2011 to update the implementation procedure for collection of taxes as per new provisions introduced in budget 2011-2012. Finance Act 2001 has introduced changes in the income tax regime and subsequently the SOP on withholding taxes has been revised in 2011-2012.
The new SOP would also facilitate the business and trade to know about their responsibilities in discharging their tax liabilities under the income tax laws during current fiscal. According to the new SOP, Withholding Tax Regime, while contributing significantly has created many problems for the taxpayers and the department alike.
The deduction, deposit of tax and filing of periodic Withholding Statements is mandatory for Withholding Tax Agents. The persons obligated to do so under the Income Tax Ordinance have to fulfil these statutory obligations within a specific time span. Fulfilling these obligations mitigate businessman's tax problems arising on account of Withholding Tax. However, it is easier to have said than done. Same is true for the tax department. The management is not simple. Documenting the problems is necessary as it may facilitate the process of realising the real issues before solving them.
With advancement in information technology, electronic filing of various statements has been introduced saving the taxpayer the trouble of waiting in the traditional queues in discharging their obligations. However, a fairly large number of Withholding Tax Agents continue to face challenges in this respect. There are advantages to pay on line to save a lot of time and hassle but a problem free electronic system of deposit of deducted tax is still to be developed along with complete ledger account of taxpayers, SOP said.
The SOP further said that the ever-expanding withholding tax regime overburdens corporate sector, who in order to fulfil their responsibilities and multiple obligations, have to bear cost of compliance and duplication of the same work. The requirement for deduction/collection and deposit of tax and periodic filing of the statements adds to hassle on their part.
The SOP said that the regulations regarding deduction/collection, payment and filing of statements are complicated and time consuming. Due to inadequate education, small companies and offices find it difficult to meet their tax obligations in this regard.
Filing of individual Challans is problematic in view of multiple clienteles of the large Agents. Lack of proper documentation causes problems for allowing credit of taxes paid in case of multiple Challans. The management of out station Challans and allowing the credit is still more cumbersome and tedious. Besides, no reliable "online? National level system for verification of payments made under various withholding tax provisions is available either. Documentation issues including correct identification of "payee" are claimed to be beyond the control of withholding tax agents, SOP added.
Aminullah Khan has taken the initiative to work on new SOPs for withholding taxes and implementation of new enforcement plan in the field formations to reduce the number of non-filers, short-filers and nil-filers of income tax and sales tax returns/statements with specific focus on withholding agents liable to deduct and deposit the tax in the national exchequer.