Monitoring WHT on 'profit on debt': RTO Karachi-II requests SBP for facilitation

Regional Tax Office (RTO) Karachi-II has requested the State Bank of Pakistan (SBP) to facilitate the tax department in monitoring of withholding tax on 'profit on debt' by banks under section 151 of the Income Tax Ordinance 2001.
Sources told Business Recorder here on Tuesday that the profit on debt was being paid by the banks to the account holders and amount of tax has to be deducted and deposited by bank's branches into the national exchequer. The Enforcement and Collection Division of the RTO Karachi-II has asked the SBP to facilitate the tax department in monitoring of withholding tax under section 151 of the Ordinance. Besides the SBP, other banks have also received similar kind of requests pertaining to monitoring of withholding tax on 'profit on debt'.
According to the RTO Karachi-II, the Inland Revenue Service department stationed at Karachi has been identified as Regional Tax Office, Karachi having head-quarters at Income Tax House, Shahrah-e-Kamal Ataturk Karachi. The RTO has now split into three RTOs namely RTO-I, RTO-II and RTO-III Karachi having certain jurisdiction. The functions of defunct RTO have been distributed amongst the three newly formed RTOs, it said.
Sources said that the concerned officer of the RTO-II Karachi has been assigned the jurisdiction over monitoring and management of tax withholding u/s. 151 of the Income Tax Ordinance 2001. In this regard, the SBP has been requested to cooperate with the tax department in discharging its legal obligation and play due role in the progress of national economy.
The SBP is requested to direct all the banks as under:- Firstly, mention Income Tax Challan Code-66" and Sale Tax Challan Code 31" while preparing challans for depositing income tax and sales tax, respectively. Secondly, provide photo copies of tax deposited challans to the RTO by 2nd day of each month. Thirdly, provide photo copies of tax deposited challans during the period from January 01, 2011 to January 31, 2011 to the RTO-II.
When contacted, a tax expert said that the tax officers should conduct a macro analysis of profit on debt paid by the banks to account holders and amount of tax deducted and deposited by all branches. The systems of the banks relating to deduction and deposit of tax should be examined along with necessary checks and balances therein for transparent deduction and deposit of tax in time in respect of all account holders.
The issue of deduction of tax on gross amount paid or on the net amount ie after adjustment of profit on debt payable also needs consideration of the concerned officers on sample basis. The officers holding jurisdiction over cases of Banks and other institutions should study the system of deduction and deposit of tax by the related prescribed persons. Such systems should be got audited through experts having adequate experience of inspection of banks, financial institutions and of system audit. The experience so gained should be replicated in other cases, analyst added.