RTO Islamabad asks banks to provide e-filed data of WHT deductions

ISLAMABAD (March 13 2009): Regional Tax office (RTO) Islamabad has directed certain commercial banks within the jurisdiction of federal capital to provide withholding tax data on various deductions made by banks and file electronic statement under section 165 of the Income Tax Ordinance 2001.

Sources told the reporter on Thursday that the taxation officers of the Enforcement Section of the RTO have visited branches of various banks for collection of e-filed data of withholding tax deducted at source covering period from July 1, 2008 till date. The RTO directed some banks to provide their e-filed data of withholding tax, which was already communicated, to the State Bank of Pakistan.

The statement under section 165 of the Ordinance 2001 covers all kinds of withholding deductions made by banks during the period under review. The withholding tax deductions made by the banks included, WHT on cash withdrawal from banks, WHT at source on supplies, WHT tax at source on services, WHT tax on profit paid to customers on saving, fixed and term deposits accounts etc.

According to sources, taxation officer informed the bank branches that the purpose of the exercise is to figure out the exact amount of withholding tax deducted by banks falling within the jurisdiction of RTO Islamabad. This exercise would help the RTO Islamabad to bifurcate its tax collection amount, which was deposited under the head of LTU Karachi.

Thus, the local tax office would know about the exact figures of tax deductions made by banks branches operating within territorial jurisdiction of RTO Islamabad. Sources said that the taxation officer has also provided a deposit code-61 (head of account) to few banks for submission of the deducted amount in the respective head of RTO Islamabad.

The computerised payment receipts of challans and photocopies have been provided by some banks branches in Islamabad to the taxation officer. According to one of the notices issued by the taxation officer Enforcement-X RTO Islamabad, as per record, no statutory statements u/s 165 of the Income Tax Ordinance, 2001 are being filed by the bank through e-filing/mail.

This non-filing of statements attracts penalty proceedings under section 182 of the Income Tax Ordinance, 2001. Hence, the bank has been provided an opportunity to furnish the copies of statements if already filed along with copy of receipt through e-filing of these statements to this office within seven days from receipt of this notice.

In case of non compliance or unsatisfactory reply, penalty proceedings would be initiated under the law for default no filing of statutory statements required under 165(5) of the Income Tax Ordinance, 2001. When contacted, experts said that department has started close monitoring of withholding tax being deducted by the banks being withholding agents.

It seemed that the department has approached the banks branches to ensure proper monitoring of withholding tax deducted by the banks. The consolidated data of banks branches is normally maintained by the head quarters of the banks. In few cases, it has been reported to the Directorate General of Withholding Taxes that few banks have not make one percent deduction on LCs (exports) under section 154 of the Ordinance 2001. They treated such payments made between bank to bank as supplies.

Keeping this in view, the department has decided that the RTOs should closely monitor the deductions made by banks. In this regard, the RTO has approached the individual banks branches. It has also been observed there is discrepancy in the data including profits submitted by the some banks to the SBP and the information filed in the withholding statements and returns. The matching of information could be done on the basis of data being collected by individual banks.

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