The Federal Board of Revenue (FBR) has imposed withholding tax on “Pakistan Real-time Interbank Settlement Mechanism (Prism) transactions at banks under section 236P of the Income Tax Ordinance 2001.

To a query, Shahid Hussain Asad FBR Senior Member (Inland Revenue) Policy and designated Official Spokesperson of FBR told Business Recorder here on Sunday that the PRISM transactions at banks have now been subjected to withholding tax under section 236P of the Income Tax Ordinance 2001. These banking transactions have been subjected to withholding tax through Income Tax Amendment Ordinance 2015.

Under the Ordinance, in section 236P, in sub-section (4), the expression “Pakistan Real-time Interbank Settlement Mechanism (PRISM) transactions or” shall be omitted, Ordinance added.

At present reduced rate of 0.3 percent withholding tax is applicable on banking transactions under section 236P of the Income Tax Ordinance 2001. The Board has already extended time period for applicability of 0.3 percent withholding tax on banking transactions of non-filers up to November 7, 2015.

According to the FBR, a new section 236P was introduced in the Income Tax Ordinance, 2001 through Finance Act, 2015, requiring every banking company to deduct withholding tax from non-filers, at the time of sale of any instrument, whether against cash or otherwise, including demand draft, pay order, special deposit receipt, cash deposit receipt, short term deposit receipt, call deposit receipt, rupee traveller’s cheque or any other instrument of such nature; and b. at the time of transfer of any sum through cheque or clearing, interbank or intra bank transfers through cheques, online transfer, telegraphic transfer, mail transfer, direct debit, payments through internet, payments through mobile phones, account to account funds transfer, third party account to account funds transfers, real time account to account funds transfer, real time third party account to account fund transfer, automated teller machine (ATM) transfers, or any other mode of electronic or paper based funds transfer.