Staff Reporter Karachi
The bank account holders paid Rs66 billion as income tax on profits derived on their deposits during the fiscal year 2020-21.
The tax payment in the fiscal year 2020-21 is 10 percent higher, compared with the Rs60 billion paid in the preceding fiscal year.
The sources at the Regional Tax Office (RTO) Karachi, which has the jurisdiction over the collection of income tax on profit from the banking deposits, attributed the record deposits of the banking system to the Covid-related restrictions.
The deposits of the banking system reached a record high of Rs19.795 billion by June 30, 2021. The sources said over the last years, deposits of the banking system have been increasing as the people prefer risk-free investment.
The Federal Board of Revenue (FBR) collects the tax on profit on banking deposits under Section 151 of the Income Tax Ordinance, 2001 at the rate of 15 percent. The banks withholding the amount at the time of payment of profit to their depositors.
The tax rate increased 100 percent to 300 percent in case the profit recipient is not on the Active Taxpayers List.
The sources said the collection from the deposits would further increase, as the changes have been made to Section 151 related to profit on debt.
The explanations on the Finance Act, 2021 issued by the FBR, said the scope of separate block taxation on interest income had been revised. “Previously, the interest income up to Rs36 million in case of individual.