Tax on Banking Transactions & the Status of Gigit Baltistan

Tax on Banking Transactions & the Status of Gigit Baltistan

Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedIn

Ijaz Shigri

Withholding is an act of deductions or collections of tax at source according to Income Tax Ordinance, which has generally been in the nature of an advance tax payment. It is an effective mechanism and important/timely source of revenue. Their contribution is about 41% of total direct tax revenues. Increase from Rs.5 Billion in 1991 to above Rs 169 Billion in 2007 speaks of exponential growth and consequential heavy reliance on withholding taxes in Pakistan. Under the repealed Income Tax Act, 1922, tax was deducted from two main sources of income; namely, salaries and interest on securities. Over the period of time, Withholding Tax net was extended, by steadily introducing different Provisions in the Tax Laws. The repealed Income Tax Ordinance, 1979, brought in all the provisions of the Income Tax Act, 1922. However, in the 1990s, withholding tax net was expanded extensively by providing for withholding tax on a wider variety of transactions and making most of them presumptive. Provisions of the Income Tax Ordinance, 2001, are more or less the same, except for a few changes and additions. Important withholding provisions relate to salary, imports, exports, commission and brokerage, dividend, contracts, Cash withdrawal, profit on debt, utilities, vehicles tax, stock exchange-related provisions and non-residents, etc., with varying rates.

In the budget 2015/2016 the government introduced 0.6 percent withholding tax on non-cash banking transactions made by non-filers of income tax returns, which was also approved by the Parliament, Senate and the same was become part of Finance Act, 2015.

After several protest by business as well as trade community, Finance Minister Senator Muhammad Ishaq Dar held meetings with representatives of business community and trader.

A temporary arrangement has been made and 0.6 percent was reduced to 0.3 percent and the reduced rate was promulgated through a President Ordinance on July 11, 2015. Besides, the finance minister said that the 19-member committee would also resolve the tax issues that surfaced after the budget. The decision, however, rejected a large segment of traders. Government likely to reduce furthers the rate but there was no intention to withdraw the levy.

Recently, the Government of Pakistan imposed 0.6 percent withholding tax on noncash banking transactions made by non-filers of income tax returns at Gilgit Baltistan. When we talk about Constitutional rights the Government clearly reply that Gilgit Baltistan is not part of Pakistan then how is possible to imposed such a levy at non state of Pakistan?? The impositions of taxes like direct & indirect are illegal and against the wishes of locals. We have no representative in Parliament & Senate.

Recently, the Ministry of Foreign Affairs in Islamabad & Ministry of Information has declared G-B a disputed territory linked with the Kashmir issue.

 Decision making in GB is only in hands of Islamabad not in any GB Personal either elected or Nominated it only impose decisions on GB without any consent of GB people .The setup of GB is going with signal of executive order of Islamabad. GB councils under control of executive order. It is true that Islamabad has no legal/constitutional rights to make this decision as;

  1. We are not part of the constitution
  2. Self Governance Order 2009 is a temporary notification which may be withdraw by any government
  3. There is no representative in the parliament, NA and Senate
  4. There’s no independent setup
  5. We are not eligible to collect royalty from resources
  6. We are not part of NFC award.
  7. No member appointed from GB for the governing body of the Economic Corridor of China-Pakistan.

How is it possible to make decision without fulfill locals’ wishes??? It’s totally against jurisdiction.

If Gawadar can be a tax free zone despite of having constitutional rights, then why GB is not entitled to the same?

The region is ignored when it comes to mega projects. Recently the federal Government signed many MOUs with China for the China-Pakistan Economic Corridor but not even a single one is mentioned in the official documents for G-B, although the region offers more than 600 KM of land for the corridor.

Before levying any taxes regime, we need to understand the structure of the economy of GB and its capacity to tolerate various levels of tax burden. What sectors will undergo the new tax regime. What threshold is to be fixed? Will the taxes levied be regressive or progressive? It’s our task that how to collect taxes but before identification of region we never accept such a levy.

We demand of the Prime Minister of Pakistan Mian Muhammad Nawaz Sharif kindly accept GB as a part of Republic of Pakistan and announce constitutional rights to the GB locals.

We also demand to the Minister of Finance of Pakistan Mr. Ishaq Dar, Chairman FBR MR. Tariq Bajwa please withdraw “Section 236P” from Finance Act 2015 or any amendment arrange through ordinance.

Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedIn
About author

Pamir Times

pamir.times@gmail.com

Pamir Times is the pioneering community news and views portal of Gilgit – Baltistan, Kohistan, Chitral and the surrounding mountain areas. It is a voluntary, not-for-profit, non-partisan and independent venture initiated by the youth.