LAHORE - As the National Assembly has currently started the debate on federal budget for 2018-19 the business community has reiterated its demand to abolish the withholding tax on banking transactions, though the government has reduced its ratio to 0.4 percent from 0.6 percent.

FPCCI Standing Committee chairman and Lahore Businessmen Front leader Sardar Usman Ghani said that the government move of reducing WHT ratio on banking transaction for non-filers has created problems for the filers, as there is almost no difference of tax ratio on banking transaction for both. Instead of giving relief to the filers the government once again facilitated the non-filers, he added.

Financial experts said that the imposition of the WHT on banking transactions apparently defeated the real purpose of discouraging the cash economy. They are of the view that WHT on non-cash banking transactions pushed up currency in circulation, leading to a reduction in private business deposits significantly. That decline further triggered a hike in circulated currency, which grew by 21.5 percent on average during July 2015 to June 2017, they added.

Noted economist Dr Qais Aslam said that the government has reduced the withholding tax on non-cash banking transactions for non-filers to 0.4 per cent down from 0.6pc. The private business deposits fell from 27.6 percent to 25 percent after imposition of the WHT on banking transactions.

Sardar Usman Ghani said the traders were asking the government for long to abolish the withholding tax on banking transactions and this was the major demand which was not accepted.

He said that majority of the traders already have started their businesses on cash transactions instead of banking instruments due to high withholding tax.

He said it was unjust to pay tax on hard earned income while the person had already paid taxes on that income. The pensioners, widows and children were paying 0.06 percent tax on banking transactions while they were not liable to pay tax.