Tuesday, June 28, 2011

National Bank of Pakistan(NBP) served notice for Rs9bn tax evasion

The Federal Board of Revenue (FBR) has issued recovery notice of over Rs9 billion to NBP, which was allegedly evaded or concealed after deduction of withholding tax, official sources said on last Friday.“A demand notice for payment of Rs9.4 billion has been sent to NBP for short payment over the years,” a FBR official said on the condition of anonymity. “The demand was created on failure to produce records against interest payment on transactions claimed by the bank.” The official said monitoring of withholding tax deduction was conducted lately.The official also said that NBP was given June 30 to make the payment, after which action would be initiated provided in the Income Tax Ordinance, 2001.

When contacted, the NBP’s official spokesman confirmed the issuance of notice to the bank and said that the FBR conducted monitoring of withholding tax for 2008, 2009 and 2010. “The FBR served notices which the bank provided reconciliation statements along with evidence to support tax deposit,” the spokesman NBP said.

He said that the bank is in process of settlement of this issue with FBR in accordance with the provisions of Income Tax Ordinance, 2001.

The monitoring of withholding tax was initiated three months back at Large Taxpayers Unit (LTU), Karachi which identified serious irregularities on the part of the banks as they did not remit the due share to exchequer.

Khawar Khursheed Butt, Member - Inland Revenue, FBR, recently confirmed that around 20 banks had been found involved in these irregularities and revenue authorities estimated around Rs thirty billion would be collected by June 30,2011.

HE also said that Rs22 billion recovery notices had been issued to 8 banks. The member said that banks moved the Sindh High Court(SHC) for stay order against FBR notices. “The honorable court did not grant such bid of banks and suggested appeal at different forum,” he added.

The monitoring of withholding tax is part of revenue generation, especially for the ongoing fiscal year in 2010-11 which the revenue body is facing huge difficulties in meeting the target of Rs1588 billion. “These measures will help the FBR to achieve FY11 revenue target,”.