Although Finance Minister Ishaq Dar on Friday tried his best to persuade the representatives of the business community not to go ahead with their call for a complete shutter-down strike across Pakistan on Saturday against the government’s imposition of Withholding Tax (WHT) on banking transactions, the traders announced later in the evening that they would go ahead with the strike because the government was not ready to consider their recommendations.
President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), Mian Idrees accompanied by former FPCCI president Zubair Tufail called on Dar at his office on Monday to break the deadlock over the new tax, which aims to rope in non-filers of taxes into the tax net. The government had initially announced 0.6 per cent tax on banking transactions for all non-filers but it later conceded to the traders’ demand to reduce it to 0.3 per cent until September provided the non-filers register themselves with the Federal Board of Revenue (FBR) and become part of the tax net.
During the meeting, the FPCCI officials informed the minister about their meetings with traders and representatives of various business sectors to ascertain their standpoint and apprehensions with regard to the withholding tax. Dar assured the trade representatives that their fears and misunderstandings will be addressed appropriately. He said that the levy of withholding tax was only applicable to the non-filers and the business community should have a clear understanding of this fact.
“The filers, whether their income is in taxable limit or not, are exempted from paying this tax so they have nothing to fear from the imposition of WHT,” Dar said, urging the on non-filers to file their returns with the tax authorities and avail exemption from the tax. He assured the businessmen that the tax authorities won’t treat them unfairly.
However, Dar admitted that some banks had deducted WHT on banking transactions of tax filers, and said that the SBP had been asked to instruct banks to reverse the entries where this tax had been deducted erroneously.
Rejecting the finance minister’s call to call off the strike, various trade associations in Karachi, Lahore and Islamabad said they would go ahead with today’s strike. However, the business groups in Islamabad announced that they would hold a shutter-down strike on Aug 3.
KARACHI AND INTERIOR SINDH:
All small traders in Karachi and interior Sindh have announced to close their business on Saturday (today), however the big trade bodies like KCCI and FPCCI are silent over this issue.
Most of the small trade bodies, including market associations would observe strike on Aug 1 against imposition of 0.3 per cent advance adjustable withholding tax on withdrawal of above Rs 50,000 or cheque, pay order etc on non-filers of income tax returns.
Traders in Karachi told Pakistan Today that ever since the government had imposed 0.3 per cent WHT, the bigger companies had started deducting Rs 1,000 against a transaction of above limited amount from small businessmen in the name of WHT. They said that the companies were doing so to avoid paying the WHT from their own pockets.
At an emergency meeting of traders’ representatives from various parts of the country, Khawaja Shafique, chairman All Pakistan Anjuman-e-Tajiran, said the decision to observe a strike on Aug 1 had been taken following a consensus reached at the gathering. He asked the traders to hoist banners in their markets to make the strike successful. However, another group of Punjab will observe strike on August 5.
The traders’ association said the federal government and FBR have adopted a way to rob the traders and general people in the name of taxes.
Sindh Jewellers Association Chairman Haroon Chand said that the government and tax authorities had failed in addressing their concerns therefore gold markets across Sindh would go ahead with the strike call.
Sources in the Karachi Chamber of Commerce and Industry (KCCI) told Pakistan Today that around 255 trade bodies and market associations have so far endorsed the strike on August 1 in Karachi and other parts of the province. However, the top elected members of the KCCI are silent over this issue after the meeting with Ishaq Dar.
Talking to Pakistan Today, President All Pakistan Business Forum Ibrahim Qureshi said that the government should announce business-friendly policies to attract investment in the country. “The government should understand that protests and strikes always hit the economic activities hard in an atmosphere of terrorism therefore it should not push the traders in a closed alley,” he said.
He also criticised the unadjustable 8 per cent withholding tax on revenue of service sector. He said the tax was putting the sustainability of this sector at stake in a country where cost of doing business is already very high.
According to the banking sources, the banks are still facing liquidity crisis in the banking system as most of the businesses are making direct payments and the State Bank of Pakistan is supporting banks through money injections operations.
On Friday, the SBP injected an amount of Rs 850 billion in the banking system for next seven days to meet the banks’ requirements.
Meanwhile, the business community of Islamabad has decided to go for shutter-down strike on Aug 3.
The consensus decision was announced by Abdul Rauf Alam, chairman Joint Traders Action Committee during a meeting at Islamabad Chamber of Commerce and Industry.
The traders vowed that they would not accept forced collection of withholding tax on banking transactions and called upon the government to immediately withdraw 0.3 per cent WHT.
