ISLAMABAD: Taxpayers are desperately waiting for the new Withholding Income Tax Regime (WHT Rates Card) to be applicable from July 1st, 2020 to ensure non-deduction of nine different types of withholding taxes abolished in the budget through Finance Act, 2020.
Tax experts and withholding agents told Business Recorder, here on Friday that the new withholding tax rates had become applicable from July 1st, 2020.
It is the responsibility of the FBR to guide the withholding agents about the new tax rates, and those taxes, which were abolished through the Finance Act, 2020.
In budget (2020-2021), the FBR has deleted the following withholding tax provisions: Collection of advance tax on education-related expenses remitted abroad; tax on steel melters and composite units; withdrawal of balance under pension fund; tax on local purchase of cooking oil or vegetable ghee by certain persons; advance tax on functions and gatherings; advance tax on cable operators and other electronic media; advance tax on dealers, commission agents and arhatis etc.; advance tax on insurance premium; and advance tax on tobacco.
In order to ensure benefit of tax relief to these nine categories of withholding taxes, the FBR should publicize that the government has abolished nine withholding taxes and withholding agents should not deduct taxes in these specific cases.
On the FBR website, the FBR is still displaying Withholding Income Tax Regime (WHT Rates Card) Guideline for the Taxpayers, Tax Collectors and Withholding Tax Agents - as per Finance Act, 2019, - updated up to June 30th, 2019.
However, this chart has not been updated in line with the provisions of the Finance Act, 2020.
There are apprehensions that many withholding agents may continue to collect taxes on the said provisions, which were deleted in budget (2020-2021). There is an urgent need to update the Withholding Income Tax Regime (WHT Rates Card) Guideline for the Taxpayers to provide benefit of the abolition of withholding taxes to the taxpayers and the business community, the tax experts say.
The FBR website also says that, "this Withholding Tax Rates Card is just an effort to have a ready reference for facilitation of all the Stakeholders of Withholding Tax Regime".
This is only possible, if the FBR timely updates the withholding tax chart for the facilitation of the taxpayers and the withholding agents.
Copyright Business Recorder, 2020