The proposed Section 236P to the Income Tax Ordinance, 2001 through Finance Bill (2015-16) requires a banking company to withhold tax @ 0.60 percent on the sum total of transactions exceeding Rs 50,000 per day as mentioned in the said proposed Section. According to a tax expert, the proposed section covers only non-filers on the assumption that all the bank accountholders must file their tax returns.
Further, the transactions mentioned in the proposed Section are all kinds including ATM, PRISM, ONLINE, INTER & INTRA BANK but the exemption of Rs 50,000 per day is for all transactions and not one. The limit should be Rs 50,000 per transaction per day, he added. Following is the text of the proposed section 236P (advance tax on banking transactions otherwise than through cash).- (1) Every banking company shall collect advance adjustable tax from a non-filer at the time of sale of any instrument, including demand draft, pay order, special deposit receipt, cash deposit receipt, short term deposit receipt, call deposit receipt, rupee traveller's cheque or any other instrument of such nature.
(2) Every banking company shall collect advance adjustable tax from a non-filer at the time of transfer of any sum through cheque or clearing, interbank or intra bank transfers through cheques, online transfer,
telegraphic transfer, mail transfer, direct debit, payments through internet, payments through mobile phones, account to account funds transfer, third party account to account funds transfers, real time account to account funds transfer, real time third party account to account fund transfer, automated teller machine (ATM) transfers, or any other mode of electronic or paper based funds transfer. (3) The advance tax under this section shall be collected at the rate specified in Division XXI of Part IV of the First Schedule, where the sum total of payments for all transactions mentioned in sub-section (1) or subsection.
(2), as the case may be, exceed fifty thousand rupees in a day. (4) Advance tax under this section shall not be collected in the case of Pakistan Real-time Interbank Settlement Mechanism (PRISM) transactions or payments made for Federal, Provincial or local Government taxes.