ISLAMABAD (July 09 2003) : No further amendment in the income tax law is required as banks/financial institutions (FDIs) profit reporting circular has been issued by the State Bank of Pakistan (SBP) in consultation with the Central Board of Revenue (CBR), top tax manager Vakil Ahmed Khan said here on Tuesday.
He was responding to various queries raised in a press release issued by Karachi Chamber of Commerce and Industry (KCCI) criticising the said SBP circular.
The SBP in a recent circular directed all banks and DFIs to provide information to CBR, on biannual basis, in respect of those accounts where banks and DFIs pay any profit or return in excess of Rs 10,000 per annum in an account or on deposit maintained with the bank or DFIs.
Vakil told Business Recorder that it was mandatory under the old income tax law to report both name and amount to CBR.
As it was a cumbersome procedure, the CBR issued income tax circular 13 of 1991 under which banks were not required to disclose the accounts and names of interest/profit recipients.
He said that the CBR is not legally bound to withdraw circular number 13 of 1991 as State Bank's recent circular has been notified in consultation with tax authorities making profit reporting by banks part of new law.
He said that the banks and development financial institutions (DFIs) would not find it difficult to report the name of account, address of account, NIC/NTN and amount of profit/return paid by an individual as tax authorities could get the computerised data from the banks.
When asked to comment on the statement of Chamber of Commerce and Industry, Karachi, claiming that seeking information on withholding tax would cause distrust between the banks and clients as demand of withholding tax was considered to be full and final liability of taxpayers, the Member Direct Taxes negated the plea of the chamber saying that withholding tax is not full and final discharge of tax liability but is adjustable tax.
Vakil said that Saudi Arabia and Pakistan have completed first round of negotiations on avoidance of double taxation.
The initial sketch of the terms and conditions of the convention were discussed between the two sides.
Saudi side was represented by the Director General of International Taxation, Saudi Arabia.
The Saudi delegation is expected soon for the next round of negotiations.
The tax would be deducted in the country where the income would generated, he said.
Replying to another question he said that Finance Minster Shaukat Aziz would soon visit CBR to congratulate CBR Chairman and the team of tax managers on collection of over Rs 460 billion, crossing the laid down revenue target.
Finance Minister and tax authorities would discuss the strategy for meeting tax projections of 2003-04.
All CBR members would give detailed presentations to the Finance Minister pertaining to their previous performance as well as future strategy.
Vakil Ahmed Khan said that CBR collected Rs 150.7 billion as direct taxes against target of Rs 148.4 billion during 2002-03, not including refund vouchers sanctioned in June, but not issued in that month.
There is no possibility of any upward/downward revision of the target of Rs 510 billion set for fiscal year 2003-04, he added.
When asked how provisional collection figure took a sudden jump from Rs 454.5 billion to Rs 459 billion in one day, Vakil said that there were some major tax payments which were not confirmed late on night of June 30, 2003. These payments were added the next day, taking total collection to Rs 459 billion, surpassing the target.