Summary Banks had provided records of account holders to the FBR
ISLAMABAD (Dunya News) – Latest statistics revealed on Friday that bank deposits have increased by at least nine percent contrary to the expected cut due to increased withholding tax on transactions.
The statistics issued by the State Bank of Pakistan (SBP) show that the deposits have escalated by nine percent in the first three quarters of 2015. Deposits have risen to Rs 9,000 billion during January-September period.
Experts have said that the revelation puts to rest the speculation that the government and banking sector would suffer from the increased withholding tax. Traders unions had taken to protests and refused to comply with the increase right after the announcement.
They had warned the government of funds’ withdrawal from accounts if the new order was not annulled.
On the other hand, economic experts had welcomed the decision and said that increased withholding tax could help strengthen the economy. They further said that the act could also expand tax circle for the government.
Earlier, Federal Bureau of Revenue (FBR) Chairman Tariq Bajwa said that the government is in touch with trading bodies to resolve persistent withholding tax issue. He said that the government had already cut the withholding tax from 0.6 percent to 0.3 percent to accommodate demands put forth by protesting bodies.
In the last week, Bajwa addressed a Public Finance Management Conference in Lahore. He said that Federal Finance Minister Ishaq Dar was scheduled to hold another round of talks with disengaged traders on October 14.
READ MORE: Ishaq Dar to make another reconciliation attempt with traders: FBR Chairman
The FBR Chairman said that the imposition is on tax evaders and is an attempt to widen tax net. However, bank transactions have not seen any negative outcome of the new law, he added.
Banks had provided records of account holders to the FBR. Records included accounts’ data of importers, exporters and different companies.
READ MORE: Banks forward records to FBR to grip withholding tax evaders
The development came after the government, in the ongoing fiscal year imposed withholding tax on bank transactions be it through cheque, demand draft or pay order that is above Rs 50,000. Earlier, the withholding tax was limited to 0.6 percent however, on July 9 it was reduced to 0.3 percent following protests by traders.
