Banking customers are now embracing the burden of a new tax as commercial banks have started deducting advance tax of up to 3 percent on foreign transactions through debit and credit cards.
The Finance Act for Fiscal Year 2018-19 passed a new advance tax levy on individuals remitting amounts abroad through credit, debit or prepaid cards.
In this regard, a new section (236Y) was inserted into Income Tax Ordinance 2001 through Finance Bill 2018, which bounds banks to collect one percent advance tax from income tax return filers and three percent from non-filers who transfer the money abroad.
Accordingly, banks are required to collect advance tax at the time of transfer of any sum remitted outside Pakistan on behalf of any individual who has completed a credit, debit or prepaid card transaction with a foreign resident.
There are nearly 21 million debit cards and 1.4 million credit cards issued by different banks to their users in Pakistan.
Tax experts said the additional tax was imposed not only to generate revenue but to monitor the foreign transactions to different countries and to discourage flight of capital through banking channels especially in the scenario when foreign exchange reserves are depleting. On the other hand, this tax will increase the extra burden on the customers already paying high banking charges by the banks.
It is pertinent to mention here that banks do charge up to 5 percent additional charges on the transactional value on the utility of debit card and credit cards.
In the last couple of years, the utility of these cards has increased for making transactions to different countries as many of the banks introduced Titanium Debit/ Credit Cards to their customers, who are frequent travelers, with increased the transactional range.
Besides, the number of users of these cards has risen in recent years for making direct purchase and sale of goods from e-commerce stores. This tax is likely to hurt them as well.
On the flip side, people may use cash preferably Dollars in different countries instead of using the debit and credit cards to save their hard earned money.
You can’t take out more than $5k cash when travelling abroad so using
cash more is not an option. You have to use CCs/DCs. I actually don’t
know how travellers manage because our cards have very low limits in US
dollar terms and foreign merchants are suspicious of them so there’s a
high likelihood they will deny them outright.
The
bigger impact IMO will be on ecommerce. Merchants importing goods via
aliexpress and alibaba type sites, advertisers advertising using google
adwords and facebook, webmasters purchasing hosting and so on.
euery policy hurts Pakistan with no change of improvemmdnt
hah, when will this WHT/AT or Bhata Tax polices will be abolished at once, and a fair low and broad base uniform tax policy will be implanted.
I’ve a vision of only 3 type of taxes in Mulk e Khudaidad
1- Income Tax starting with 1% from 100k per month, and max 20% on over 2 million per month.
2- Custom Tax, staring from 1% and upto 20% depends on the type of goods.
and 3- Sales Tax, again defends on the goods from 1% to 20%.
On other bhata or any type of tax and…
All type of transitions and Sales/Parches must be electronically documented and there must be one law for all, no exception.
Any tax filling form should be simplified so majority will understated and will fill it with no or little assistant.
With only few above steps and reforms I hope on day this country will stand firm against economic challenges.
once again , one more step of economical terrorism only & only in Pakistan,
so now dear citizens of Pakistan, you have to pay more 3% Bhatta tax for nothing but offcourse safety & security and for the assets of great Pakistan rulers and mafia system
congrats to mafia of Pakistan again
This is really such a moral decay. Today i got to know that i was getting charged for no reason in my credit card statements. Better to keep money in foreign account and not to bring it to the Pakistan.
this system should be replaced with digital currency.
Is there any other mode of foreign transaction by which we can save these extra charges?
That is not fair. :(
Ab Government Change bhi ho jay tou yeh Taxes shayad Remove nahi hon gay.
Buhat Ghalti hui muj se PTI ko Vote de kar… :(