Tax on cash withdrawals fires up dollar demand

By
PakistanToday
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9
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KARACHI:

The government of Pakistan, which preferred to tax the already taxed money in this fiscal year, shocked depositors and traders who have to deal with banks for payments on a regular basis. Even the salaried class will have to pay tax on their already taxed salary, according to sources.

According to a report by the Express Tribune, dealers in the currency market said that surplus money was not going to banks for deposits, and instead was flowing towards the open currency market for dollar buying.

“The dollar was traded as high as Rs103.20 in the kerb market on Saturday. Demand for the currency is still high,” said Anwar Jamal, a currency expert and dealer. The greenback has been above Rs103 for more than a week now.

Inflows of foreign currencies remain high during Ramadan as thousands of overseas Pakistanis return home to celebrate Eid with their families.

Before Ramazan, the dollar crossed Rs102 in the inter-bank market and started heading towards Rs104 in the open market.

The State Bank of Pakistan (SBP) intervened and announced to provide the dollar at Rs103 through the National Exchange Company. It was considered that the central bank set Rs103 as base price for the dollar in the open market. However, the US currency fell even below Rs103 the very next day after the announcement, according to the report.

Now, the dollar has become attractive again despite no demand for Umrah or summer vacations.

Currency expert said traders and others who have surplus money are buying dollars instead of depositing them in banks. There could be an alternative payment system through dollars.

The government has imposed a tax of 0.6 per cent on cash withdrawal from banks if the sum of money is Rs50,000 or above. The government also imposed tax on transactions, the report said.

 

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