The government has imposed 0.15 percent withholding tax on cash withdrawals by exchange companies (ECs) to check underreporting of business transactions from next fiscal year. Sources said Monday that at present no tax is being deducted by banks on cash withdrawals by exchange companies. There is underreporting of transactions by such companies. Therefore, it has been proposed that cash withdrawal by exchange companies be subjected to tax at the reduced rate of 0.15 percent.
The FBR has estimated collection of Rs 6 billion in 2015-16 through imposition of withholding tax on cash withdrawals by exchange companies. According to the Finance Bill (2015), (ii) after clause (28A), the following new clause shall be added, namely: "(28B) The rate of tax shall be 0.15 percent under section 231A on cash withdrawal by an exchange company, duly licensed and authorised by the State Bank of Pakistan, exclusively dedicated for its authorised business related transactions, subject to the condition that a certificate issued by the concerned Commissioner Inland Revenue for a financial year mentioning details and particulars of its Bank Account being used entirely for business transactions is provided," it added.