Federal Board of Revenue (FBR) Chairman Syed Muhammad Shabbar Zaidi has issued a letter to the heads of all banks wherein reference to the earlier sent letter dated October 1, 2019 has been given and it has been stated that banks' role is to act as a trustee/custodian on behalf of the various customers for the acquisition of T-Bills, PIBs, etc.

No information in this respect has been received so far. This reminder letter is being written for the reason that FBR is obliged to ensure in order to comply with various regulatory requirements including those inducted by FATF that there is proper compliance of various regulatory environments. There are indications in various cases, especially being those related to individuals that the amount held under these accounts are not appropriately disclosed in the individual personal income tax returns, says a press release.

The chairman FBR has further stated that there are instances of 'Bond Washing' whereby the 'interest accrued' is transposed as capital gain to avoid withholding requirement on interest where State Bank of Pakistan is to act as withholding agent.

Chairman FBR has stated that such securities are acquired by persons other than banks under 'Investor Portfolio Securities' (IPS) system. The State Bank of Pakistan identifies the bonds and securities held by the bank as custodian or trustee of another entity including an individual. It is for this reason that the amount is reflected as an off-balance sheet item in the records and financial statement of the bank. It is important to note that since the investment remain off-balance sheet therefore it is highly important for the fiscal regulatory authority to ensure that all related fiscal aspects being disclosure of wealth and withholding as required under the law is assured.

The chairman FBR has again requested all the banks to provide the information as soon as possible.-PR