Section 165A of the Income Tax Ordinance, 2001, imposes a duty upon banking companies in Pakistan to provide certain information to the Federal Board of Revenue (FBR). This section is crucial for the FBR to monitor financial transactions and detect potential tax evasion.
Key Provisions of Section 165A
Information to be Provided: Banking companies must furnish the following information to the FBR:
- Cash Withdrawals: A list of individuals who have withdrawn more than Rs. 50,000 in a single day, with details of the withdrawals and any associated tax deductions.
- Deposits: A list of individuals who have deposited Rs. 10 million or more in their accounts during the preceding calendar month.
- Credit Card Payments: A list of individuals who have made credit card payments totaling Rs. 200,000 or more during the preceding calendar month.
- Profit on Debt: A list of individuals who have received profit on debt and any associated tax deductions.
- Business Accounts: A list of individuals who have opened or re-designated their business accounts during the preceding calendar month.
Coordination with the FBR: Banking companies must appoint a senior officer to coordinate with the FBR and provide any additional information or documents as required.
Protection from Legal Proceedings: Banking companies and their officers are protected from civil, criminal, or disciplinary proceedings for furnishing information under Section 165A.
Confidentiality: The information received by the FBR under Section 165A is subject to confidentiality, except as provided in Section 216 of the Ordinance.
Significance of Section 165A
Section 165A plays a vital role in the FBR’s efforts to combat tax evasion and ensure tax compliance. By requiring banking companies to report suspicious financial transactions, the FBR can identify individuals who may be attempting to conceal their income or assets. This information can be used to conduct audits, investigations, and other enforcement actions.
Conclusion
Section 165A of the Income Tax Ordinance is a crucial provision that empowers the FBR to gather information from banking companies. This information is used to monitor financial transactions, detect potential tax evasion, and ensure that individuals are complying with their tax obligations.
