KARACHI -  Karachi Chamber of Commerce & Industry (KCCI) President Muffasar Atta Malik has said that any attempt to implement the Section 165 and Section 165-A of the Income Tax Ordinance will be totally rejected by the business and industrial community of Karachi as both these sections allow the Federal Board of Revenue (FBR) to gain access to bank account holders’ information, which - if given - would only pave way for harassment and bribery whereas no major breakthrough will be achieved in terms of broadening the tax base.

Referring to a meeting of Tax Reforms Implementation Committee held under the chairmanship of PM’s Special Assistant Haroon Akhter recently in Islamabad, Malik said that the meeting reviewed the possibility of taking serious action against commercial banks for their continuous refusal to provide information about their accountholders. “We, the business and industrial community of Karachi, fully appreciate and support commercial banks’ reasonable reluctance to give online access to information about accountholders as they (the banks) are rightly fearing that the sensitive information will be misused”, he added.

Malik was of the opinion that access to account holders’ details will open gates of corruption where corrupt tax officials will start minting money by carrying out under the table deals. He said that under Section 165 of the Income Tax Ordinance, banks are bound to share the details of tax collected from a person including his Computerised National Identity Card number and the value of transactions whereas under Section 165-A, the banks are also bound to provide the FBR online access to their central database containing details of the accountholders.

He advised the State Bank of Pakistan (SBP) and Pakistan Banking Association (PBA) not to succumb to the pressure being created by the federal government as access to such a sensitive information would further discourage the business and industrial community to maintain their funds in local commercial banks and the situation may result in flight of substantial amount of capital from the country, plunging the country into deep economic crisis. The KCCI president said, “By giving access to account holders’ information, the efforts to document the businesses will be backtracked as it would encourage cash economy which already picked up a lot of pace after the imposition of withholding tax on banking transactions.”

Referring to 0.4 percent tax being levied by the federal government on any banking transaction above Rs50,000, Malik recalled that the then SBP governor Ashraf Mehmood Wathra, during his last visit to Karachi Chamber in March 2017, informed that the federal government had agreed to double minimum limit from Rs50,000 to Rs100,000 for levying the additional withholding tax which will come into force after the announcement of next budget. “The announcement was widely acclaimed by KCCI members who attended the meeting but unfortunately, no relief was provided in the federal budget and the unjust withholding tax on a mere amount of Rs50,000 remains enforced to date which has to be enhanced to at least Rs100,000 or above”, he added.

Instead of penalising the existing taxpayers and raising the number of indirect taxes, the government should take action against tax evaders, Malik advised.