Karachi banks charge 0.6pc WHT despite SBP’s cut

1
184
  • Locals complain banks charging WHT against SBP’s orders while banker denies receiving SBP’s instructions
  • SBP spokesman says will check if any bank was not following SBP’s regulations, says banks will charge 0.6pc WHT from Oct 1

 

Contrary to State Bank of Pakistan (SBP)’s instructions, most of the banks in Karachi are still deducting 0.6 percent Withholding Tax (WHT) on banking transactions above Rs 50,000 cheque or cash, Pakistan Today has learnt.

A non-tax filer, Shamim Ahmed, said, “I withdrew Rs 250,000 from my account on August 10 from Safoora Goth and the bank deducted Rs 1,500 from my account. The same bank deducted the same amount from his account on another cheque on August 11.”

On Ahmed’s complaint, Pakistan Today conducted a survey of different banks in Clifton and Defense, where it was confirmed that the banks were still charging 0.6 percent WHT illegally on cash withdrawal, while 0.3 percent on cross-cheques.

The government privatized banks including Habib Bank Limited and Allied Bank Limited are not following the central bank’s instructions regarding 0.3 percent WHT from non-fillers.

A manager of a private bank said, “We deduct 0.6 percent on cash withdrawal from cash counter of the bank, ATMs etc, while only deduction of 0.3 percent is being made on transaction from cross-cheques.”

He said if the account holder is not a tax-payer, he has to pay 0.6 percent or 0.3 percent WHT on transactions of Rs 50,000 and above.

Upon query, the banker said he did not receive any notification from the SBP about a reduction in WHT.

SBP IS CLEAR:

According to SBP’s spokesman Abid Qamar, “The central bank has issued clear directions of the federal government to all banks to deduct only 0.3 percent from the non-filers and I do not know why the banks are deducting 0.6 percent on cash transactions.”

There must be some sort of confusion in this regard and SBP will check if any bank was not following SBP’s rules and regulations, Qamar assured. “Banks will be allowed to charge 0.6 percent WHT from October 1, 2015 as per the federal government’s directions.”

TRADERS FIND A WAY:

In the meanwhile, the business community in Karachi is still making short payments through cash or in installments to avoid WHT on banking transactions.

A banker in Clifton said, “Inflows of cheques in bank has shrunk many times during the last few weeks. A bank which used to receive 1,000 cheques daily before July, is now receiving only 200 to 250 cheques in a day.”

The banker further said that the banks were facing liquidity shortage since the announcement of WHT on banking transactions, which according to him, is “very high”. He said the profits of banking sector in future will plummet as the banks would earn money only from their own products.

The federal government, through Finance Bill 2015, had passed a 0.6 percent WHT on all banking transactions. On agitations from the business communities all over the country, it has been reduced to 0.3 percent. In this connection, the government has directed the central bank to charge only 0.3 percent WHT only from non-tax filler.

According to a notification from the Federal Board of Revenue (FBR), the banks will be allowed to charge 0.6 percent WHT from October 1.

1 COMMENT

Comments are closed.