The gap of withholding tax between filers and non-filers would be increased in areas where FBR''s enforcement is weak. The areas where adjustable withholding tax is applicable could be subjected to higher rates of the levy for non-filers. Presently, most of the areas having adjustable rate of withholding tax are also subjected to higher rates.
In this regard, the FBR has reviewed the entire Withholding tax (WHT) regime for coming budget. The decision of the last Tax Policy Conference held at the FBR House was to further enhance withholding tax rates on non-filers. The non-filers are subjected to higher rates of withholding tax on different kind of transactions. It has been proposed that the difference of withholding tax rates between the filers and non-filers would be further increased in coming budget.
According to sources, there is a possibility that the sectors, where withholding taxes on non-filers have been doubled during last years, would not be touched. The sectors which are not performing well under the context of revenue contribution may be subjected to enhanced rates of withholding tax.
Presently, withholding tax to be collected from every importer of goods on the value of goods under section 148 of the Income Tax Ordinance 2001 is one percent of the import value increased by Custom -duty, sales tax and federal excise duty for filers and 1.5% of the import value as increased by customs-duty, sales tax and federal excise duty for non-filers.
In case of filers, persons importing pulses are liable to withholding tax at 2% of the import value as increased by Custom-duty, sales tax and federal excise duty and for non-filers 3% of the import value as increased by custom - duty, sales tax and federal excise duty. In case of commercial importers, the rate for filers is 3% of the import value as increased by custom -duty sales tax and federal excise duty and for non-filers 4.5% of the import value as increased by custom-duty, sales tax and federal excise duty.
At present, for ship breakers on import of ship, the WHT tax rate for filers 4.5 percent non-filers 6.5 percent. Industrial undertakings, the rate of WHT for filers is 5.5 percent and non-filers is 8 percent. Certain companies are liable to 5.5 percent WHT tax on filers and 8 percent for non-filers. Tax shall be deducted on the gross amount of dividend paid under section 150 of the Income Tax Ordinance 2001, the rate of WHT tax on filers is 12.5 percent and non-filers 20 percent.
There are different rates of WHT for filers and non-filers in case a person paying profit/yield has to deduct tax from the gross amount of yield/profit. Yield or profit (profit on debt) on account, deposit or a certificate under the National saving schemes or Post office savings account; profit on debt paid by banking company or financial institution on account or deposit Maintained and profit on securities, other than those mentioned in s.151(1)(a), issued by federal/provincial government or a local government.
Similarly, different rates of withholding tax is applicable on non-resident person on the execution of contract or sub-contract under a construction, assembly or installation project in Pakistan including a contract for the supply of supervisory activities relating to such project. Every Prescribed person making payment to a Permanent Establishment of Non-Resident for sale of goods and in case of a company, the rate for filers is 4 percent and non-filers 6 percent at present.
Presently, profit on bonds , certificates, debentures, securities or instruments of any kind (other than loan agreements between borrowers and banking companies or development financial institutions), for filers 10% of the gross yield paid and for non-filers 10% of the gross yield paid and other non filers 17.5% of the gross yield paid.
Tax will be deducted from non-resident person on the execution of contract or sub-contract under a construction, assembly or installation project in Pakistan including a contract for the supply of supervisory activities relating to such project, any other contract for construction or services rendered relating there to and contract for advertisement services rendered by TV Satellite Channels, for filers 7 percent and for non-filers 12 percent.
Every Prescribed person making payment to a Permanent Establishment of Non- Resident for sale of goods in case of a company, for filers 4 percent and for non-filers 6 percent. Other than company cases for filers 4.5 percent and for non-filers 6.5 percent WHT.
The WHT for payment in full or in part including by way of advance to a resident person, supply made by distributors for filers 3 percent and for non-filers 3.5 percent. For sale of any other goods, the WHT in the case of company for filers 4 percent and for non-filers 6 percent. For sale of any other goods, in the case of other than companies, taxpayers for filers 4.5 percent and for non-filers 6.5 percent.
Transport services, all others in the case of Companies for filers 8 percent and for non-filers 12 percent. Transport services, all others in all other than Company Taxpayers for filers 10 percent and for non-filers 15 percent. The WHT on execution of contracts, in the case of Companies for filers is 7 percent and for non-filers 10 percent. Execution of Contracts, in the case of other than companies, for filers 7.5 percent and for non-filers 10 percent.
The WHT is also applicable on filers and non-filers on payments made on account of winning of prize on prize bond, Cross word, raffle, lottery & quiz. Payment to petrol pump operator on account of sale of petroleum products, the rate of WHT for filers 12% and for non-filers 15 percent. Payment of cash withdrawal exceeding Rs, 50,000 in a day, the rate of WHT for filers 0.3% and for non-filers 0.6% (now reduced rate of 0.4 percent).
Sale against cash of any instrument including demand draft, payment order, CDR, STDR, RTC, any other instrument of bearer nature or on receipt of cash on cancellation of any of these instruments where transaction exceeds Rs, 2,5000 in a day for filers 0.3% and for non-filers 0.6 percent. The WHT is applicable for filers and higher rates of withholding tax on registration of Motor Vehicle, transfer of Registration or ownership of motor vehicle, Division VII, Part IV of First Schedule of the ITO. Brokerage and commission income In case of Advertising Agents for filers 10 percent and for non-filers 15 percent. Life Insurance Agents where Commission received is less than Rs, 0.5 Million per annum for 8 percent and for non-filers 16 percent.
In the case of goods Transport Vehicles, the WHT for filers Rs 2.5 per kg of the laden weight and for non-filers Rs 4 per kg of the laden weight. In the case of Passenger Transport Vehicles plying for hire, seating capacity 4 or more persons but less than 10 persons for Rs filers 50 and for non-filers Rs 100.
In the case of Passenger Transport Vehicles plying for hire, seating capacity 10 or more persons but less than 20 persons for filers Rs 100 and for non-filers Rs 200. In the case of Passenger Transport Vehicles plying for hire, seating capacity 20 persons or more for filers Rs 300 and for non-filers Rs 500.
Other Private Motor vehicles, including car, jeep ,van, sport utility vehicle, pickup trucks for private use, caravan automobile , limousine , wagon or any other automobile used for private purpose. Up to 1000cc for filers Rs 800 and for non-filers Rs 1200; 1001cc to 1199cc for filers Rs 1500 and for non-filers Rs 4000; 1200cc to 1299cc for filers Rs 1750 and for non-filers Rs 5000; 1300cc to 1499cc for filers Rs 2500 and for non-filers Rs 7500; 1500cc to 1599cc for filers Rs 3750 and for non-filers Rs 12000; 1600cc to 1999cc for filers Rs 4500 and for non-filers Rs 15000; 2000cc & above for filers Rs 10000 and for non-filers Rs 30000.
Registering or attesting transfer of any Immovable property, the rate of WHT for filers 1 percent and for non-filers 2 percent. Advance tax has to be collected from wholesaler, distributor & dealers at the time of sales made to them. In case of fertilisers for filers 0.7 percent and for non-filers 1.4 percent.
Advance tax has to be collected from wholesaler, distributor & dealers at the time of sales made to them other than Fertiliser, the rate of WHT for filers 0.1 percent and for non-filers 0.2 percent. Advance Tax on purchase of immovable where the value immovable property is more than 4 million for filers the rate of WHT is 2 percent and for non-filers 4 percent. Every Person making payment of dividend in specie shall collect (deduct) from gross amount of dividend in specie for filers the rate of WHT is 12.5 percent and for non-filers 20 percent.
Copyright Business Recorder, 2017