Withholding Tax on Bank Transactions to Stay at 0.3% Till February End

Finance Minister Mohammad Ishaq Dar, in his role as Economic Coordination Committee (ECC) chairman of the cabinet, has given approval to amend the withholding tax rate from 0.6% to 0.3% for non-filers who conduct banking transactions, till the end of this month, February 29th, 2016.

Previously, the Finance Minister was adamant on raising the WHT rate to 0.6% on banking transactions made by non-filers of tax returns. After a rising chorus of pressure by traders and the business community nationwide, it seems that the move has been deferred for now.

If a person or association made a transaction using normal banking channels to the tune of Rs. 50,000 or higher, they’d be required to pay a levy of 0.3%, or 0.6% if the extension hadn’t come through.

The Federal Government, in powers vested in them by the Income Tax Amendment Act 2016, can amend the rate on WHT after prior recommendation of the ECC.

Mr. Dar, in his stead as ECC Chairman, also has the authority to extend the date for the filing of tax returns after the expiry of the current deadline. The move is aimed at Individual non-filers of tax as well as Associations of Persons, in a bid to expand the tax base of the country by bringing more registered tax-payers in the net.

Following this recent extension of deadline, traders can also file tax returns under the Income Tax Act 2016 (second Amendment) by the same date i.e. 29th February 2016. This is the last date to file returns, a move that has been undertaken to facilitate tax payers to the maximum.

Pakistan has long suffered from a low tax-to-GDP ratio, with the figure being 9.45%, one of the lowest worldwide. The government hoped to meet its revenue collection targets by enhancing the WHT rate on banking transactions over Rs.50,000 but the rising spate of pressure from the business community has appeared to stay the government’s hand for now.

Samir is the Head of Entertainment at Lens by ProPakistani. You can reach out to him at samir.ya...

      • Blame of increasing the taxes in the country. The taxes today, feel like a form of Bhatta. You don’t pay to avail benefits. You pay to stay out of jail. I don’t regret being a tax payer, but when i think about it, i am effectively giving out more or less 40% of my income out in (direct/indirect) taxes. The rest of 60% is just not enough to cover the monthly expenditure, with basically ZERO savings.

        • Oh, the blame falls on the public imo. As I see it, the reason behind all the indirect taxation is that most people don’t pay income tax and that mostly the middle-lower class pays income tax while the rich don’t pay a dime or pay very little.

          • what a lame excuse.
            less than 1% are paying direct taxes and you are saying 99% population is elite class who don’t pay tax.

          • In easy/understandable words the ‘Ashrafia’ don’t pay tax and they DO NOT want to pay it.
            The Govt (as usual) put this tax on ‘Aam awaam’ so they, at the time of giving their responsibility to a new corrupt Govt will say “humne x amount of tax li thi’.

        • We Salaried persons are suffering lot,

          Firstly tax is deducted from our salaries,

          Then again we pay tax when we a make a transaction,

          Again when we bought some thing

          Lastly again when using services.

            • Brother Ovais,

              There is also tax of hospitals.

              We are paying the tax on each and every thing in pakistan but not seeing any developments in our country.
              When government implemented the tax on cash widraw from banks and income tax than they must stop the tax on all others things because we are already paying the tax on our money

              • Bhai jis tarhan kunda use nahi krne pe hum tax detay hain (extra bill ki soorat main) waise hi politician aur businessman logoun kay tax na denay pe bhi dena hoga :/

        • people in developed countries pay that much tax! the difference is that in return for half their monthly earning those people are given free facilities like medical care, old age benefits, free education and peace of mind…..remember “peace of mind”? it’s that feeling of freedom when u were 3 years old! even our children have to spend their childhood worrying about how much money they have, how much their parents can spare for them. These are the perfect conditions for children to lose all sense of morality and resort to criminal activities like cheating friends and strangers, lying to gain profits, domestic violence over inheritance, mugging people on the streets for some extra pocket money, and even becoming henchmen for the political parties who threaten the citizens, extort money from the neighborhood and kill people on orders from their superiors.

    • Not blame game
      It’s who is going to suffer?
      The answer is public.
      No tax = No services
      we think that salex tax or toll tax is enough to run country and when these idiots go abroad they pay all the taxes.

      • No tax? What “NO” tax? The current taxes are more than enough to cover up government’s costs. Its the corruption in every government sector which is making tax payments redundant.

        People are happy to pay taxes as long as they don’t take a big toll on your personal income. Its not the case today. A person with barely 15-20k per month income still ends up paying like 5-6k in taxes (direct/indirect). How is that justified?

        • FYI pak has one of lowest tax collection in world. If that satisfy you then 150+ countries are making money just if it covers 200 million people here.
          Second you better justify the the 5-6 k tax from 20k salary? plz elaborate.
          Now come to corruption, out of around 200 countries, there are hardly 20 countries who are corruption free. Pakistan currently stands at 53rd most corrupt in 170 countries.So people in other 52 countries shouldn’t pay taxes as they are more corrupt than us but unfortunately they pay tax.
          You are just bitten by media experts and you got played without knowing anything.

          • FYI he is right by all means. We pay high taxes when it comes to indirect taxes.
            and yes Pakistan is lowest (income) tax collector. Politicians and industrialists aside, even medium-sized business don’t pay taxes.

            But govt isn’t innocent either, They’ve put the burden otherwise via indirect taxes, we pay taxes on import, transits, then tax on sale, and then it comes tax on revenues. this is the last stop where govt is not benefiting much.

            O yes and don’t forget the bhataas on every container, every transport that is being collected countrywide, by who? by the government owned machinery.

            • What indirect taxes?
              Salex tax, toll, import tax or duties or tax on basic commodities like fuel gas?
              Everything is taxed in whole world, the rate is even same or less than even developed countries.
              Give me one example where there is no indirect tax.
              Taxation always in two forms. one is direct and other is indirect. What you say is you heard from Rauf kalsra type people. We pay indirect taxes only but there is no releif bcz that’s the only way here which has one problem that you can’t differentiate tax amount. It’s uniform tax paid by poor and rich both. The direct tax is based on individual income and in pakistan less than 1% pay direct tax which in return put burden on indirect form and poor will suffer.
              What people like you blame politicians through media again. Politicians are less than 1% of that who don’t pay taxes. You think 1000 politicians are the only factor in taxes? what about other millions? or they all politicians. Not 100% politicians aren’t paying taxes. Last year around 40% are either not paying taxes or have more income then they show.

              • Firstly, I don’t know any Kalsra, That was my opinion.

                But at least those who pretend to lead you should set examples before making laws for others.

                I already said that Pakistan lacks in collecting direct taxes. I don’t know why are you taking it on your nerves.

          • There is a difference between ‘tax implemented’ and ‘tax collected’. This was the reason of my initial question, asking who to blame. Personally, i blame the public. Public is more corrupt than our leaders. Public wants to evade taxes, and between this sh*tfest, the ones who “DO” pay taxes, get to bear the most burden.

            I am not going to waste my breath to preach on deaf ears.

            • both of the statements “tax collected and tax implemented” are linked to government. They are the ones in control of the word TAX. and now you personally blame public.. its like blaming the sheeps instead of Shepherd.. :P

              • I blame the public, because public is the reason for such drastic measures. They are afraid to pay their share of taxes, and usually avoid/evade taxes whatever means necessary. Its the doing of a few people due to which whole nation has to bear the burden, hence the increase in scope and rates (of taxes). Ofcourse Govt. is the culprit. But i blame the public more.

                • exactly. and also blame public for recent tax amnesty scheme for black sheeps, Those who are making laws for tax are protecting illegals otherwise.

            • Tell me one one dr sahib what is salex tax and who should pay it and who should pay income tax …. U are clearifying taxes in pakistan u cant …. Second u previously asked brother to justify 5k tax out of 15 to 20 k salaried person ? First of all that person is deduction of tax before salaray came secondly tax in income tax and sales tax in electricity bills gas bills thirdly when he goes to buy anything …. Its above 5k …. Hope u understand …

              • This is a strange country where coustumer of product is paying gst of that profuct …. And u are right collection of tax is low … So what it should be low when for example in pakistan there are 1000 big industrialist and they have political contacts they are showing their business in loss and actualky giving zero taxes no one can ask him .. Beside of collecting from 2000 persons u are just collecting from 100 to what u expect ..

                • And u are giving example of most corrupt countries u should be ashamed u are basturds of pakistan …. Instead of looking at devoloped countries u are saying we are less corrupt country … Lanat hai tum logon par … Begairato

            • U are wrong … U should be ashamed have u see the condition of homes , of basic needs , clean water …. Schools… Do u observe all that …. Peaple dont have food to eat… Commiting suicides … If u dont paying tax i mean if u are not registered tax payer then what u think u are not tax payer , u are triple times giving tax … Look at your electricity bills … Buy a milk pack for your kid , or buy a roti , buy a fruit , buy a medicine u are giving sales tax … U are also giving sale tax in your home , office electricity bills … This government i mean nawaz and shahbaz should hang till death they are basturds … They are sons of bitches

          • pakistan’s taxing practices are not so clear cut for international analyst could categorize it. Lowest taxes is just a surface analysis. The taxes on the people have always been indirect….When u buy something at any shop in pakistan u are already paying the tax on that product mixed in with the (questionably ambiguous) profit margin that shop is taking. The government should atleast pass a law making it mandatory for retail and whole sale stores to fully disclose the tax on the products sold along with the profit the shop is taking. What PML-N is doing now is adding direct taxes (on the citizens) on top of the existing indirect taxes (through product vendors). So people are now paying even more then before.

      • people paid municipality tax when the city government first came into existence…..but after PPP disbanded it out of spite for MQM (which has been their only motivation in Karachi) did that tax serve anyone? our city fell into chaos within the first 3 months , garbage was everywhere, no one was cleaning the gutter mains, we were back where we started in the the “pre-musharraf” era. u say no tax = no service? I say “(tax) or (no tax) = no service”.
        Our problem is not non-tax payers but a corrupt government that always makes financial laws that protect their behind at the expense of the citizens! in this country the elites in the government live aloof of all the people’s day to day problems in their personal bubbles. they are absolutely disconnected from the citizens as reflected in their law making practices, only coming down from their palaces when they need votes…..much like PTCL’s customer service! The people will naturally rally to the person or government who connects to them and delivers on what he/they promises. So yes people pay taxes when they move abroad because they are getting benefits in return unlike this country’s democratic government who take and take and take but give the working class people nothing in return.

  • Make tax deposit process easier and see how people flock to deposit taxes. India did some revolutionary changes in their tax collection system and tax deposit rate soared.

    Having a pathetic, error prone, website that is even hard for the professionals to understand and corrupt officials that leave no excuse to generate bribe opportunities won’t take you anywhere.

    Extending filing dates and offering amnesty schemes show signs of weakness. The leaders are morally weak. They do not have the will and determination to enforce the laws hence they hide behind extensions and excuses.

    Before blaming public, give them a friendly environment.

    • Friendly environment milay na mily “tax amnesty scheme” zaror mil jatai TAX evaders ko wo bhi sirf 1% pr. These scheme are force me to think that whole salary class is fool who are paying more then 20% of their salary in TAX.

  • You buy a soap of Rs.50, you pay 17% GST straight. Now, this 17% may not be going to govt at all because in many cases companies sell the stock off record or some individual from inside take the stock from tax-free/low-tax sources like fair price shops, redundant inventory, settlement with tax officer etc. And then come companies who pay corporation tax, income tax, export duty, excise duty, WHT etc. Its not difficult to use loopholes to avoid taxes. Tax people they hire are not only to save tax but to steal tax. Many small companies only pay the tax officer 10 times less than the tax amount to make the biggest dent on govt pocket.

    So whose fault it is. A person who is buying a soap has no way to avoid tax but this soap company which would barely make 5% net profit can simply double its profit by using simple methods. Only if tax officers were more honest they could easily hunt down all these tax thieves but ‘no’, they also want to get rich too, and everybody from minister to clerk is taking some piece of cake.

    So do we really need to increase taxes or do we need to revamp our tax collection structure. I have a hunch that if all things in tax collection flow like in western countries then we would have a tax to GDP ratio of around 40% (one of the highest in world). But to prove that need huge research effort, lot of number crunching, lengthy report and a lot of time. But its not difficult to see if we think it thoroughly.

  • Hi I have an innocent question. What if a person lives in abroad and earning money from there and depositing his savings in Pakistani banks then what withholding tax I have to pay for my transactions?

    • Noora will F**K you the way he F**K the whole nation on daily basis he has to buy Flats in London and else where so someone has to pay it.
      Its bhatta not tax, imagine we earn abroad we pay taxes there and send money home and when our family members withraw it they pat 0.6% bhatta on it.

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