Banks in Pakistan have agreed to share details of their account holders with tax authorities in a deal inked this week to check suspected undocumented money in the banking channels, reported a local media house.
The report stated that an agreement was reached at meeting between Syed Shabbar Zaidi, chairman Federal Board of Revenue (FBR) and chief executives of commercial banks on November 27, 2019 at the Large Taxpayers Unit (LTU) Karachi.
A source quoted in the report said. “The PBA (Pakistan Banks Association) has agreed to withdraw its petitions from the High Courts and also agreed to provide account holders information under section 165A (of the Income Tax Ordinance, 2001).”
“It will enable the tax department to access real-time information of transactions made through the banking system.”
The report further claimed that the banks had agreed to withdraw their petitions by next week. Section 165A was introduced to the main statute through Finance Act, 2013 but the implementation remained in litigation before the higher courts since then. Under Section 165A, the banks are responsible to provide details of financial transactions made by their account holders to the FBR.
The FBR chairman, at the meeting, said section 165A was amended in 2014, 2018 and recently through Supplementary Finance Amendment Act, 2019 on PBA’s recommendations, the sources quoted in the report claimed.
“Therefore, the PBA and its members should not have any objection on the implementation of section 165A of Income Tax Ordinance, 2001,” Zaidi was quoted as saying.
As per law, the banks were bound to provide details of account holders. Those details included a list of persons making cash withdrawal of Rs. 50,000/day or over Rs. 1 million/month; deposits of Rs. 10 million/month; credit card payment of Rs250,000/month; and details of persons receiving profit on debt above Rs. 500,000/year.
The laws in Income Tax Ordinance, 2001 have superseded other laws, including Banking Companies Ordinance, 1962; the Protection of Economic Reforms Act, 1992; and Foreign Exchange Regulation Act, 1947, yet the banks were not providing the details on one pretext or the other.
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