WHT agents for direct deposit of tax into government account

Islamabad:

To prevent tax evasion (WHT) and promote documentation, the federal government has decided to make it mandatory for withholding agents to promptly and promptly deposit tax collected from suppliers of goods and services into national coffers.

The Federal Board of Revenue (FBR) has developed a fast-track system of payment receipts for immediate deposit of withholding tax in the exchequer instead of retaining the revenue with it.

To implement the decision, the FBR has prepared draft amendments to the Income Tax Rules, 2002 and published them for inviting suggestions from interested parties. Stakeholders were given seven days to submit objections and recommendations in relation to the new proposed rules.

After the deadline, the income tax amendment rules will come into effect by way of notification. According to FBR officials, the implementation of the new system will lead to an increase in WHT collection and promote further documentation of the economy.

So far, withholding agents used to deduct the tax received from suppliers and deposit it at the time of filing withholding tax returns and returns to the FBR.

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However, under the new proposed system, once these agents issue an invoice, the WHT will be remitted directly to the government account. In addition, withholding agents should also provide details of suppliers and buyers who pay the tax.

Also, FBR will be able to learn about details of buying and selling done by sellers as well as goods supplied by suppliers. This will help stop WHT evasion and uncover cases of unpaid tax on the supply, purchase and sale of goods. According to a copy of the draft rules prepared by the FBR, a new chapter called ‘Part Four’ has been added after Part Three in Chapter 9 of the Income Tax Rules, 2002.

All the agents notified by the FBR will have to comply with the requirements of the new chapter introduced in the rules. These agents should install a Point of Sale (POS) system acquired from an FBR licensed individual and company and connect it to the FBR network. Under this system, agents will be able to issue digital invoices through FBR’s online portal or FBR’s integrated electronic system.

Through digital invoicing, the WHT collected on all transactions will go directly to the government account, while the remaining capital will remain with the dealer.

Under the proposed rules, each agent will be issued an ID and will have to update their profile. The identity will be mentioned on the electronic payment receipt issued under this system.

Published in The Express Tribune, December 24^u2023.

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