Pakistan-based Banks have agreed to share information about account holders making cash or non-cash transactions with the Federal Board of Revenue, reported “The News”.
Sources told the paper that the banks will provide said information under an agreement. “However, banks did not share the amount for transactions that will be shared with FBR for any accounts”, said the paper.
Previously banks had suggested an amount between one to five million rupees on an annual basis.
The agreement was reached after several meetings between the FBR and the Pakistan Bankers Association (PBA). The terms of the agreement are expected to be officially disclosed soon.
FBR had issued notices to the banks whose account holders had their withholding tax deducted by the bank itself.
Masood Ali Naqvi, chairman of the Tax Reforms Commission (TRC) had confirmed that the PBA and the FBR were discussing the issue while the commission had received a draft to share their opinion.
The banks had previously withheld this info, stating legal limits on disclosing them.
The PBA had mentioned in its budget proposals for the next fiscal year that the problem under Section 165 and Section 165A of the Income Tax Ordinance 2001 is related to accessing customer information.
According to the law, banks are required to share the information with FBR via online means.
However they asked the Board to remove this permission to access the banks’ data, arguing that Section 176 already allows FBR to access information about suspicious account activity related to tax evasion.
The banks are presently deducting 0.4% withholding tax on cash transactions of Rs 50,000 and above for non-filers through Section 236P.
This section of law was introduced to increase tax collection but the banks refused due to the Banking Companies Ordinance 1962 and the Economic Reform Act 1992, which relates to customer confidentiality.
The previous sources also said that the FBR will conduct a comprehensive data check in case the banks hide or refuse to share information about the withholding tax they deduct.
Via: TheNews