ISLAMABAD - As the business community is planning to start countrywide strike against the withholding tax on banking transactions, the government has once again called meeting of traders, representatives of chambers of commerce and industries on Monday to resolve the issue.
“Finance Minister Senator Ishaq Dar has called meeting of traders, representatives of chambers of commerce and industries and concerned members of parliament regarding the matter of withholding tax on banking transactions in FBR, Islamabad on 27th July (Monday)”, stated an official handout released by Finance Ministry on Thursday.
Earlier, the government and traders on July 9 had reached an agreement to bring down controversial 0.6 percent withholding tax on banking transactions to 0.3 percent till September 2015. The government had done it with Presidential Ordinance and gave traders three months time for becoming tax filers. From October 1, the ordinance would lapse and the government would again start charging 0.6 percent tax on all the banking instruments traded by the non-filers. It was also decided that 0.3 percent WHT is adjustable for filers up to 30.9.2015.
After its promulgation, the rate of withholding tax on all banking transactions valued at over Rs50,000 is reduced from 0.6pc to 0.3pc with effect from July 11. The transaction tax is only applicable on non-filers.
However, the decision divided the business community, as numbers of traders opposed the agreement. All Pakistan Anjuman-e-Tajiran central general secretary, Naeem Mir, has summoned the meeting of traders today (Friday) in Lahore to devise the future strategy against the 0.3 percent withholding tax on banking transactions.
“We will decide today whether to attend the meeting called by the government or not”, Naeem Mir said while talking to The Nation. He further said that we would take the viewpoint of the traders on the 0.3 percent withholding tax on banking transactions before making any strategy.
Sources in FBR informed that upcoming meeting would try to hammer out sector-specific turnover tax rates, as the Presidential ordinance covers only the first two points of the agreement, which deals with the withholding tax rate and its implementation period. The government has not provided legal cover to points three and four of the agreement that deal with minimum sale price and minimum turnover tax, respectively.
It is worth mentioning here that the government had imposed an adjustable advance income tax at the rate of 0.6pc of the amount of transactions 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 in the budget 2015-16. The government has estimated to generate Rs 35 billion through this measure during ongoing financial year 2015-16. The government has taken this step in a bid to broaden the tax base of the country by bringing non-taxpayers into the tax net.
The government’s decision has agitated the traders across the country and some of them observed partial strike in different cities of the Punjab. Finance Minister Ishaq Dar on that time has taken the notice of business community’s reservations over the imposed 0.6 percent withholding tax on all the banking transactions in the budget 2015-16 and invited the business community and Federal Board of Revenue to address the issue of imposing withholding tax on banking transactions. Later, the federal government constituted a 19 members committee to resolve the issue of the imposition of 0.6 per cent withholding tax on banking transactions that annoyed the business community. A 19-member committee decided that the government would halve the withholding tax rate to 0.3pc till September 30.
Staff Reporter adds from Lahore: Today’s traders countrywide convention will be attended by APAT president Ajmal Baloch, APAT chairman Haji Shafiq, central general secretary Naeem Mir, Punjab president Mehboob Sirki, All Karachi Tajir Ittehad president Jamil Paracha, APAT Sindh president Adul Qayyum Qureshi, APAT Balochistan president Abdul Rahim Kakar, KPK president Haji Halim Jan, AJK president Adul Razzaq, and representatives of Qaumi Tajir Ittehad Pakistan and All Pakistan Anjuman-i-Tajiran Ashraf Bhatti group.
Mir said that APAT’s strong protest forced the government to hold talks. He urged the opponents of advance withholding tax on banking transactions not to sabotage the positive outcome of talks earlier held with the government and withdraw shutter-down strike call as it would only divide the business community and damage their interests.
He said the government agreed with the demand of traders to abolish the prevalent income tax system for traders, implementing turnover tax for them to the maximum ratio of 0.25pc.