NBR detects loopholes in collection of tax at source by govt agencies

The National Board Revenue (NBR) has detected four major loopholes in the collection of tax at source by the government entities.
The loopholes, sources said, have been causing seepage of income tax revenue.
It has found that some entities are not deducting taxes from the taxpayers while others are collecting taxes at lower rates.
The NBR has also found some of the government entities not depositing the deducted taxes with the public exchequer while some are not maintaining the deadline with regards to the deposit of the deducted tax to the public exchequer.
Tax at source, known as withholding tax or Tax Deducted at Source (TDS), contributes some 54 per cent of the income tax collection.
Following the issue, NBR Chairman Md Nojibur Rahman, also Secretary to the Internal Resources Division (IRD), sent a Demy Official (DO) letter Wednesday to the all Secretaries of the government seeking their cooperation in the matters of timely and orderly collection of taxes by respective entities and deposit of the same with public exchequer.
Talking to the FE Wednesday, the NBR Chairman said the letters have already been sent to all secretaries requesting them to ensure proper deposit of withholding taxes.
The NBR requested them to ask their respective departments at monthly coordination meetings or at the time of reviewing Annual Development Programme (ADP) for collecting withholding taxes and to deposit it properly.
"We would publish a booklet to make the deducting authorities aware of need for collection and deposit of tax at source regularly," he said.
In the DO letter, the NBR Chairman said the government ministries and departments have to pay withholding taxes at the time of implementation of different projects under the ADP. The tax has to be deducted from salaries and allowances, consultancy fees, purchase of products or services etc.
The deducting authorities have to collect the taxes and deposit it to the public exchequer within a stipulated time set by the taxmen.
Under the existing rules, the implementation agencies of foreign-funded projects have to deduct taxes while making payments to any foreign contracting firms.
In some cases, there are a few international agreements that incorporate tax-exemption clauses. Accordingly, the local implementing authorities claim tax exemption on the foreign funds.
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