Government of Pakistan is planning to excise a 0.6% tax on every banking transaction.

Any and every transaction involving cash and bank including bank withdrawals, cheque transfers, or intra-bank transfers would be subject to the tax payment.

The act is seen as an extreme step taken by the Finance Minister Ishaq Dar who wants to a spare the poor from the tax but can’t really figure out how to raise money by any other measures.

Having PKR 6.3 trillion worth banking transactions, 0.6% of that estimates PKR 37.8 billion– a figure hard to ignore!

Even though it has a population of 190 million people, Pakistan still has a very narrow taxable population. Less than 900,000 people pay tax.

Increasing the number of people paying taxes rather than overburdening those who are already paying the heavy taxes is a heated debate.

However what we know for sure is that the government has taken no prominent steps to increase tax-net. In fact, not even widows and pensioners have been spared from this taxation.

According to the Senator Talha Mehmood -JUI-F, “People have started withdrawing cash from banks and converting into gold to avoid taxes”

Although the discussions about an exemption for transactions up to PKR 50,000 are being discussed in the standing committee, it’s too early and too optimistic to predict any reversed decision.

According to Ishaq Dar, the standing committee will reconsider the 0.6% tax on banking transactions and would either suggest lowering it or imposing a minimum exemption threshold.

To witness if this new taxation would be successful in achieving its targets or amplify the transactions in the informal banking sector is now just the matter of time!