ISLAMABAD

The government on Tuesday agreed to fix minimum threshold of Rs 50,000 for charging 0.6 percent withholding tax on the amount of transaction to be collected on all banking instruments and other modes of transfer of funds through banks for non-tax filers.

Finance Minister Ishaq Dar has agreed during the meeting of Senate Standing Committee on Finance and Revenue to fix the minimum threshold for charging 0.6 percent withholding for all banking transactions being not active taxpayers. He said that proposal would be incorporated in the windup speech on budget.

Earlier, Senator Muhammad Talha Mahmood remarked that people had started purchasing jewellery and keeping it in banks lockers instead of having bank balance due to the government’s proposal of charging withholding tax on all banking transactions including demand drafts and pay orders.

The government has proposed in the Finance Bill 2015 that Adjustable advance income tax at the rate of 0.6pc of the amount of transaction is proposed to be collected on all banking instruments and other modes of transfer of funds through banks in the case of persons who do not file Income Tax returns. The government has estimated to generate Rs 34-38 billion through this measure.

Talking about the super tax imposed in budget, Finance Minister said government levy a one-time tax on the affluent and rich individuals, association of persons and companies earning income above Rs 500 million in tax year 2015 to rehabilitate the Temporarily Displace Persons of the operation Zarb-e-Azb. The government needs Rs 80 billion for the rehabilitation of TDPs and security enhancement in next fiscal year, therefore; the government imposed super tax.

He disagreed with a proposal of a Senator for voluntarily tax payment for TDPs, as he said that people had not contributed in income support levy imposed two years ago for helping poorer of the poor. The government had generated only Rs 85 million through income support levy, he added.

Ishaq Dar informed government is working on the mechanism within the premises of the constitution to disburse development funds to the Senators after the Supreme Court judgment that bar the government in releasing funds.

Secretary Finance Dr Waqar Masood assured the committee that government is not going to increase the power tariff next year. He informed that government has slashed the power subsidy on the recommendations of NEPRA and government would still provide subsidy to the poor and middle class using 300 units of electricity in a month.

Ishaq Dar informed that government had provided Rs 2.6 trillion subsidy to the power sector in last seven to eight years. The government could easily build two mega dams, Dasu and Diamir Bhasha, if government had not provided subsidy to the poor segment of the society, he added.

Talking about the increase in salaries, he said that government has announced to merge two ad-hoc relief allowances in the basic pay scales and enhanced the medical allowance by 25 percent and increased the salaries by 7.5 percent. The combined effect of the government’s decision is 11-14 percent increase in salaries.