ISLAMABAD – Withholding tax collection from profit on bank deposits hassurged by a massive 204% to Rs. 21.6 billion during the first five monthsof the current fiscal year, compared to Rs. 7.1 billion in thecorresponding period of the last year, said a report.
A major factor that drove the increase was the higher interest rates, whichimproved returns on investment. The State Bank of Pakistan kept thediscount rates unchanged at 13.25% in the last monetary policy.
According to the sources quoted by the report, the Federal Board of Revenue(FBR) started scrutinizing the incomes following an extraordinary increasein earnings from bank deposits.
The report stated that the deposits in the banking system had increased toRs. 14.31 trillion by November 2019, showing an increase of 9.48% ascompared with Rs. 13.07 trillion in the same month last year.
The sources said that FBR will obtain information from banks aboutindividuals with large deposits. The banks are required to provide a listto FBR which will have particulars of deposits aggregating Rs. 10 millionor more made during the month to tax authorities. They are also liable toprovide a list of individuals receiving profit exceeding Rs. 500,000 peryear.
Read Top Stories
Initially, FBR is inquiring about specific cases from the banks where itstax offices discovered undisclosed amounts on which the profit was received.
It is to be noted that the banks were required to provide details oftransactions on a monthly basis. However, banks are now required to providedetails biannually with the amendment introduced to Income Tax Ordinance2001.
Therefore, banks will provide details of deposits in their withholdingstatements which will be submitted in January 2020.
