ISLAMABAD: Federal Board of Revenue (FBR) has passed new orders to enhance withholding tax on Interbank funds transfers or Pakistan Real-time Interbank Settlement Mechanism (PRISM) transactions under section 236P of the Income Tax Ordinance 2001.
According to FBR spokesperson and senior member FBR (Inland Revenue Policy) Shahid Hussain Asad, said that all PRISM transactions conducted at banks are now subjected to withholding tax.
He said the tax will come under Section 236P of the Income Tax Ordinance 2001. The government has already passed the amendment through the Income Tax Amendment Ordinance 2015.
The transactions will be taxed at a relatively reduced rate of 0.3 percent. The amount was previously stated to be 0.6 percent in July but the trade community held a protest which led to this reduction.
The protesting community has been given an extension of 1 week (till 7th November) to file their income tax returns under the new ordinance.
The section 236P has been recently introduced in the Financial Act 2015 which requires all banking companies to deduct withholding tax from non-filers at the time of sale or any financial transaction.
The tax also applies to “demand drafts, pay orders, special deposit receipts, cash deposit receipts, short term deposit receipts, call deposit receipts, rupee travellers cheques or any other instruments of such nature”.
The tax is also applicable at “the time of transfer of any sum through cheque, interbank or intra bank transfers through cheques, online transfers, telegraphic transfers, mail transfers, direct debits, payments through internet, payments through mobile phones (easypasia etc.), account to account funds transfer, third party account to account funds transfers, real time account to account funds transfer, real time third party account to account fund transfer, automated teller machine (ATM) transfers, or any other mode of electronic or paper based funds transfer.”