PTBP Web Desk
The Federal Board of Revenue (FBR) has taken a significant step to enhance tax compliance and streamline the collection of withholding taxes by designating 34 banks as withholding agents. This decision aims to integrate these financial institutions with the Synchronized Withholding Administration and Payment System (SWAPS), an advanced platform designed to improve tax collection efficiency.
The FBR issued an official notification, SRO 2041(I)/2024, on Tuesday, outlining the responsibilities and conditions for the newly appointed withholding agents. The integration with SWAPS is part of the government’s broader initiative to digitize tax administration and simplify processes for taxpayers and financial institutions.
As per the notification, the following banks have been declared withholding agents under the new framework:
- Al Baraka Bank (Pakistan) Limited
- Allied Bank Limited
- Askari Bank Limited
- Bank Al-Falah Limited
- Bank Al-Habib Limited
- Bank Islami Pakistan Limited
- Bank of China Limited
- Citi Bank N.A.
- Deutsche Bank AG
- Dubai Islamic Bank Pakistan
- Faysal Bank Limited
- First Women Bank Limited
- Habib Bank Limited
- Habib Metropolitan Bank Limited
- Industrial and Commercial Bank of China
- Industrial Development Bank of Pakistan Limited
- JS Bank Limited
- MCB Bank Limited
- MCB Islamic Bank Limited
- Meezan Bank Limited
- National Bank of Pakistan
- Punjab Provincial Cooperative Bank Limited
- Samba Bank Limited
- SILK Bank Limited
- Sindh Bank Limited
- SME Bank Limited
- Soneri Bank Limited
- Standard Chartered Bank (Pakistan) Limited
- Summit Bank Limited
- The Bank of Khyber
- The Bank of Punjab
- United Bank Limited
- Zarai Tarqiati Bank Limited
- State Bank of Pakistan
These banks will play a pivotal role in collecting and depositing withholding taxes under sections 153(1)(a) and 153(1)(b) of the Income Tax Ordinance, 2001, using the SWAPS portal. The timeline for implementing this new system will be announced by the FBR at a later date. Until then, the designated banks will continue to operate under the existing withholding tax regime.
The integration with SWAPS requires the banks to adopt a more synchronized approach to managing withholding taxes. This includes ensuring timely collection and accurate deposit of taxes, which will ultimately contribute to the government’s revenue generation efforts.
To facilitate a smooth transition, the FBR has allowed these banks to continue following the current withholding regime until the official rollout date for SWAPS integration. This phased approach aims to minimize operational disruptions while ensuring that financial institutions are adequately prepared for the new system.
The integration of withholding agents with SWAPS offers several advantages:
- Improved Tax Compliance: By automating the tax collection process, SWAPS reduces the likelihood of errors and omissions.
- Enhanced Transparency: The system provides a clear audit trail, making it easier for the FBR to monitor and enforce compliance.
- Simplified Processes: Taxpayers and financial institutions benefit from a more streamlined process, reducing administrative burdens.
The FBR has set specific conditions for the designated banks:
- They must ensure compliance with the collection and deposit requirements under the Income Tax Ordinance.
- Detailed records of all transactions and taxes collected must be maintained to facilitate audits and dispute resolution.
- The banks are required to provide accurate and timely reports through the SWAPS portal as per FBR’s guidelines.
This move aligns with Pakistan’s broader efforts to digitize its tax administration and enhance revenue collection. By involving key financial institutions as withholding agents, the government aims to create a more efficient and accountable tax ecosystem.
Tax experts believe that SWAPS integration will address longstanding issues in tax collection, such as delays, inaccuracies, and non-compliance. Moreover, it underscores the importance of collaboration between the public and private sectors in achieving national economic goals.
The designation of 34 banks as withholding agents represents a significant milestone in Pakistan’s journey toward a digital tax administration system. By leveraging technology through SWAPS, the FBR is paving the way for a more transparent, efficient, and taxpayer-friendly system. As the implementation date approaches, financial institutions are expected to play a proactive role in ensuring the success of this initiative. For taxpayers, this development promises a smoother and more reliable system for withholding tax collection.
