Exemption of withholding taxation to promote digital transactions
According to a circular issued by Federal Board of Revenue (FBR), the withholding tax on cash withdrawals through branchless banking has been eliminated. This decision has been made to foster quicker and efficient digital transactions and increase their volume.
FBR stated that when an individual withdraws cash above Rs50,000 per day, tax rates of 0.3% and 0.6% are deducted for filers and non-filers respectively.
The federal authority has given this levy to boost digital payments in the country. They have given an exemption to branchless banking agents working for Assan Mobile Account project. It is applicable on those cash withdrawals which the entity makes to fulfill its client payments.
Withholding tax could be adjusted for internet and telephone users
FBR has also issued a notification for the subscribers of telephone and internet in the country. It stated that those receiving a monthly bill above Rs1,000 can adjust 10% of withholding tax against their overall tax payment. FBR also gave the details of withholding tax rates for internet and telephone subscribers as given under Section 236 of Income Tax Ordinance, 2001.
However, the authority clearly mentioned that there will be no withholding tax for subscribers with monthly bill of less than Rs1,000. It has also been notified that individuals responsible for preparing the telephone or internet bills or those providing prepaid cards for mobile phones or internet are responsible to collect the withholding tax from all kinds of subscribers. The tax is applied on telephone subscribers, internet subscribers, purchaser of internet pre-paid cards, purchaser of pre-paid telephone cards and while paying telephone bills or while issuing or selling pre-paid cards.
The withholding tax rate will be 12.5% for internet subscribers, mobile telephone and pre-paid internet or pre-paid telephone card. The tax rate will be applied on the bill amount or the selling price of internet prepaid card or prepaid telephone card. Additionally, even if the sale is through an electronic medium, the tax rates will remain same.
Advance taxation on airline ticket has been made adjustable
According to another notification by FBR, the withholding tax of 5% which is charged on purchase of a domestic airline ticket has been made adjustable from the total income tax liability. This notification was implemented under section 236B of Income Tax Ordinance, 2001.
It is the responsibility of the person who is preparing the ticket to exclude this 5% (from the gross amount of the ticket price) as soon as the sale amount is being realized.