Banks not sharing info about debit/credit machines with FBR?

LAHORE: Banks are said to be not sharing information in connection with debit/credit machines installed by them to different commercial establishments at their sales points, said sources in the Federal Board of Revenue (FBR).

They said the banks’ managements are taking issuance of notices to this effect as a “fishing expedition” on the part of department as the merchants regarding whom information is asked do not fall within the jurisdiction of the concerned field formations of the FBR.

In the case of some notices issued by the large tax offices (LTOs) of the FBR, banks object to any such move on the pretext that commercial entities do not fall within the category of large taxpayers.

According to the sources, the management of banks generally takes exception to all such notices while taking a view that they are under a statutory obligation of confidentiality under the Banking Companies Ordinance as well as the Protection of Economic Reforms Act.

Banks believe that tax authorities couldn’t seek information regarding a third party, especially when they do not fall within their domain, they added.

However, the Board sources said the income tax officers have vast powers to seek such information from banks irrespective their clients fall within the jurisdiction of concerned field formations or not. They said banks are bound to pass on such information if it is useful for the purpose of collecting revenue.

The sources further said the tax authorities have vast powers in respect of getting information not only about a taxpayer but also a non-taxpayer in order to bring non-filers into the tax net. They said seeking information does not amount to getting any financial information from the clients or private account holders of banks. Therefore, banks cannot hide behind the privilege of statutory obligations and term the exercise as a fishing expedition.

They added the department only seeks information about the names and business names, NTN or CNIC numbers, and address and location of the commercial establishments. None of this information pertains to their clients’ financial status or personal accounts, they added.

Tax authorities are also of the view that banks do not sustain any harm to their clients by passing such information. It may be noted that a good number of banks have also approached to the courts of law to challenge departmental notices but their pleas fail to sustain in the eye of the law at the end of the day.

It is also worth noting that two field formations of the Board in Lahore and Islamabad had also lodged FIRs against the managers of two banks last year for not cooperating in attaching the account taxpayers for recovery purposes.

Copyright Business Recorder, 2023