ISLAMABAD - Pakistan's banking businesses are standstill after the imposition of withholding tax on banking transactions, as people have started alternative measures for transferring money to each other including illegal way of Hundi.
People have started lockers transactions by exchanging the keys of bank lockers where they kept money amounting million of rupees in order to avoid to pay withholding tax on banking transactions, said Senator Saleem Mandviwalla while chairing the Senate Standing Committee on Finance and Revenue. He further said that people are also using illegal way of Hundi to transfer money.
Senator Mohsin Aziz of PTI said that billion of rupees have been withdrawn from the banks after the imposition of the withholding tax on the banking transactions. People do not cash the cheque, which is using in their transactions, he added. He proposed the government to bring major retails of the country, roughly around 500-1000, into tax net before asking small traders to become tax filers.
Saleem Mandviwalla said that imposition of withholding tax on banking transactions was just a cosmetic exercise, which is not helping in broadening of the tax base of the country.
"The government had imposed withholding tax on banking transactions for documenting the country's economy," said FBR's acting chairman Shahid Hussain Asad while briefing the committee. He further said that government would abolish all the withholding taxes when the country's economy documented.
He informed the committee although CNIC number would replace the National Tax Number (NTN) but people would still have to go for registration for giving their details. He rejected to have the data of 0.7 million people who are foreign travelers but not paying taxes. "We had asked the NADRA to provide the data of 0.7 million non-tax payers what it claimed in 2011. However, they failed to provide it, as there is no data exist," acting chairman informed.
Chairman Committee showed concerns over the non-sharing of details among the government's institutions. He said that Masood Naqvi of KPMG firm, has written a letter to the Finance Minister Ishaq Dar, saying that FBR chairman had asked the Commissioner Inland Revenue (Appeals) and Collector Customs (Appeal) not to give decision against FBR, which never happened before. However, Acting Chairman FBR showed ignorance about the letter. "Law has not allowing the Commissioner and collector to give decisions against the department. Committee members Senator Saleem Manviwalla and Senator Ilyas Bilour questioned on the balloting of tax audit, conducted by FBR. How the random audit picks the names of the opposition parties members not of the government, they asked. Saleem Mandviwalla said that government's institutions normally presented wrong figures before the committee meetings. Even, the International Monetary Fund (IMF) had noticed that Pakistan's ministries had presented wrong figures, he added.
The committee was informed that total amount of refunds to be paid stood at Rs148 billion including Rs60 billion of the sales tax and Rs88 billion of the income tax. The Federal Board of Revenue (FBR) had refunded Rs30 billion to the exporters by September 17 2015 as against Rs16 billion refunds made in previous year.
FBR informed the Senate's panel that there are 2280 tax cases pending in Supreme Court of Pakistan and 15099 cases are in High Courts by the end of August 2015.
They further informed that 13986 tax cases pending at Commissioner Inland Revenue (Appeals) and 518 in Collector Customs (Appeal) till the end of August 2015. Meanwhile, 21262 cases are pending at Appellate Tribunal Inland Revenue and 3132 are at Appellate Tribunal Customs.
Senators Muhammad Mohsin Khan Leghari, Ilyas Bilour, Ayesha Raza Farooq, Sardar Fateh Muhammad Muhammad and other government officials attended the meeting.