Chairman Senate Standing Committee on Finance Senator Saleem Mandviwala Friday disclosed that a new phenomenon of cash transactions and lockers keys exchange has emerged in the country following imposition of 0.6 percent withholding tax on banking transactions.
He informed the committee here on Friday that the cash transactions in the country have increased manifold after imposition of the 0.6 percent withholding tax on banking instruments of non-filers. Transactions take place through exchange of lockers keys. "For example, if I have to pay Rs 1 crore to another person, we can simply exchange locker keys and get the amount exchanged without involving banking instruments," Mandviwala said.
FBR team of tax managers present in the meeting was surprised to hear that some kind of lockers exchange phenomenon has emerged in the country. Acting FBR Chairman Shahid Hussain Asad said that how it is possible that the key of locker of one owner can be used by another person having different locker for exchange of cash. Mandviwala responded that it is happening and it is possible that you can take locker key of another person and use his locker to withdraw the cash.
According to Chairman Senate Standing Committee on Finance, banks have informed that billions have been withdrawn from the banks due to this levy. Senator Mohsin Aziz of PTI said that due to 0.6 percent tax, all businesses are at halt. As a result of this levy, the cash transactions have increased. The FBR has informed Senate Standing Committee on Finance that a total of Rs 59-60 billion sales tax refunds are pending with the FBR.
FBR Chief Sales Tax and Automation Abdul Hameed Memon told the committee that the pendency of sales tax refunds stood at around Rs 59-60 billion. FBR has cleared sales tax refunds of textile sector. Five export oriented sectors including textile, leather, carpets, surgical and sports goods have been paid sales tax refunds of Rs 30 billion till date. During the current fiscal year, the FBR has so far provided refunds of Rs 30 billion till today against Rs 16 billion in the same period of the last fiscal year. The increased refund payments showed that the FBR cleared liabilities of five zero rating export sector in accordance with the announcement made by Finance Minister at the floor of the Parliament. Till now, Rs 148 billion income tax and sales tax refunds are pending with the FBR. FBR data revealed that the an amount of Rs 88.432 billion income tax refunds are pending in 37,151 claims as on July 1, 2015. In case of income tax FBR has paid refunds of Rs 77.649 billion as on July 1, 2015.