Budget 2020-21: SBP proposes to abolish WHT on cash withdrawal
The State Bank of Pakistan has proposed to abolish withholding tax (WHT) on cash withdrawal from banks in Budget 2020-21. It has also asked for doing away with Super Tax on the banking sector.
The State Bank of Pakistan has also suggested a tax exemption for the Corporate Restructuring Company (CRC) for five years from starting its operations.
The proposals of State Bank of Pakistan has been sent to the Federal Board of Revenue (FBR). It was said in the proposals that individuals and businesses decrease the use of banking channels and prefer to keep the cash out of banking channels. The Currency in Circulation to Deposit Ratio that had increased from 293 percent in June-15 started declining and it just grew up by just 41.1 percent on Jan 20. SBP proposed that WHTs on cash withdrawals should be abolished to improve the deposit mobilization and development of the financial sector in Pakistan.
In addition to this, the SBP has suggested supporting the corporate tax rate applicable to banks by decreasing it from 35% to 29%. The proposal also included that the super tax of 4 percent, in addition to the corporate tax rate, should also be withdrawn in the forthcoming budget.
The International Monetary Fund (IMF) has allowed increasing the salaries of government employees in the budget 2020-21.
According to details, the decision has been announced during the third round of budget negotiations between IMF and Pakistan that took place in Islamabad on Tuesday. IMF has also allowed an increase in the pension of retired government employees. Also, the IMF agreed that there will be no increase in electricity bills and gas tariffs till October.
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