FBR designates 34 banks as SWAP agents
The Federal Board of Revenue (FBR) has designated 34 banks as
"SWAPS" agents (withholding agents) responsible for deducting and
monitoring withholding taxes. The FBR has introduced a system called the
"Synchronized Withholding Administration and Payment System" (SWAPS)
under section 164A of the Income Tax Ordinance to streamline the collection and
deduction of withholding taxes.
The banks designated as Withholding Agents (SWAPS agents) are as
follows:
1. Al Baraka Bank
(Pakistan) Limited
2. Allied Bank Limited
3. Askari Bank Limited
4. Bank Al-Falah
Limited
5. Bank Al-Habib
Limited
6. Bank Islamic
Pakistan Limited
7. Bank of China
Limited
8. City Bank
9. Deutsche Bank AG
10. Dubai Islamic Bank
Limited
11. Faysal Bank Limited
12. First Women Bank
Limited
13. Habib Bank Limited
14. Habib Metropolitan
Bank Limited
15. Industrial and
Commercial Bank of China
16. Industrial
Development Bank of Pakistan Limited
17. JS Bank Limited
18. MCB Bank Limited
19. MCB Islamic Bank
Limited
20. Meezan Bank Limited
21. National Bank of
Pakistan
22. Punjab Provincial
Cooperative Bank Limited
23. Samba Bank Limited
24. SILK Bank Limited
25. Sindh Bank Limited
26. SME Bank Limited
27. Soneri Bank Limited
28. Standard Chartered
Bank (Pakistan) Limited
29. Summit Bank Limited
30. The Bank of Khyber
31. The Bank of Punjab
32. United Bank Limited
33. Zarai Targiati Bank
Limited
34. State Bank of
Pakistan
The FBR has initiated new measures, including the implementation
of the Synchronized Withholding Administration and Payment System (SWAPS). The
SWAPS agents are required to deduct and collect taxes and transmit them to the
relevant commissioner through digital means. They are also responsible for
generating SWAPS payment receipts (SPR).
To ensure the effectiveness of the system, the law stipulates
that if the designated SWAPS agents fail to integrate with the FBR within the
specified timeframe, they will not be eligible for certain tax credits and
exemptions under the Income Tax Ordinance, 2000. However, it has been notified
that the aforementioned SWAPS agents will be responsible for collecting and
depositing withholding taxes under all sections except section 151 through the
SWAPS portal, with the specific date to be notified separately by the FBR.
During the pilot phase of software development and testing, only
7 banks out of the total 34 will be included. These banks are listed as follows:
[list of 7 banks]
The report reveals that there have been delays in initiating the
pilot projects, which is causing hindrances to the implementation of the SWAPS
system. The FBR should address these issues and ensure that projects and
implementation phases are completed within the prescribed timeframe to protect
the rights of all stakeholders and prevent revenue leakages.
The FBR aims to improve the management of withholding taxes by
implementing various reforms, such as introducing system checks and controls
during the creation of Payment Slip Identification (PSID), verifying rates and
ATL (Active Taxpayer List) status, and automating checks related to exemptions.
These reforms are currently being implemented and are expected to be completed
within the next 10 months. However, no specific basis for this timeline has
been presented.
Once implemented, these reforms are expected to limit the banks' discretion in deducting taxes at ATL rates from non-ATL individuals and granting incorrect exemptions, thereby protecting the revenue. The FBR emphasizes the need to monitor the reform process to ensure that all tasks are completed within the shortest possible time frame to avoid revenue leakage and increased project costs.