Large Taxpayers Unit (LTU), Karachi is contemplating initiating legal action against banks involved in suppressing tax collection deducted under section 236P of the Income Tax Ordinance 2001. According to sources, LTU, Karachi found glaring discrepancies during monitoring of much-criticized advance adjustable tax on banking transactions under section 236P of the Ordinance.
They said that LTU, Karachi after strict monitoring of the said tax deduction, started from September 18, 2015, was now contemplating initiating criminal proceedings against defaulting financial officers of banks. Replying to a question, they said that major default was in major banks and the quantum of tax withheld by these banks did not correspond to the payments made in these financial institutions.
They said that LTU, Karachi was going to launch a couple of FIRs against the financial officers of these banks and a detailed report in this regard would be finalised by first week of October. The government after facing serious resentment from the trade reduced its rate from 0.6 percent to 0.3 percent only for first quarter of ongoing financial year and deliberations between the government and the business fraternity were still under way.
The team of tax managers from finance department and the Federal Board of Revenue (FBR) had weighed all pros and cons of section 236P for two months before it was enacted. And the records of banking transactions, obtained from State Bank of Pakistan (SBP), shows trillions of rupees transactions.
The records had closely been reviewed after exclusion of government-to-government and bank-to-bank transactions that led the proposal of inserting section 236P in Income Tax Ordinance, 2001. Therefore, the FBR is striving to ensure its proper deduction from banks. Needless to mention, although this section had been introduced to encourage documented economy, its revenue impact was estimated at around Rs 100 billion. However, the revenue figure under the said head has been decreasing drastically that forced the LTU, Karachi to initiate monitoring exercise to ensure its proper deduction.