The Economic Co-ordination Committee of the Cabinet was informed that there is 50 percent increase in the number of income tax return filers during the current fiscal year as compared to the same period of 2015-16. Sources told Business Recorder here on Saturday that the meeting of the ECC chaired by Finance Minister Ishaq Dar was submitted a proposal by the Federal Board of Revenue (FBR) for extension in date for reduced rate of 0.4 percent withholding tax on banking transactions for non-filers.

The ECC was further informed that through Finance Act 2015, a new section 236P was introduced in the Income Tax Ordinance 2001, whereby an adjustable advance income tax at the rate of 0.6 percent of the amount of transaction was levied which was to be collected by banking companies on all banking instruments and other modes of transfer of funds through banks in case of persons who do not file income tax returns.

However, through the Income Tax (Amendment) Act 2016, the federal government was empowered to amend the rate of 0.6 percent on the recommendations of Economic Co-ordination Committee of the Cabinet. In exercise of these powers, the federal government reduced the rate from 0.6 percent to 0.3 percent up till 29-02-2016 and, subsequently, to 0.4 percent w.e.f. 1st March 2016 to 31st December, 2016, on the recommendations of ECC of the Cabinet. As recommendation of ECC of the Cabinet is mandatory, therefore it is proposed that the Economic Co-ordination Committee of the Cabinet may recommend to the federal government to extend the period of applicability of reduced rate of 0.4% to 31st March 2017 on banking transactions for non-filers under section 236P of the Income Tax Ordinance, 2001. Finance Minister Ishaq Dar has approved its submission to the ECC of the Cabinet, sources added.

Copyright Business Recorder, 2017