ISLAMABAD, Sept 2: The International Monetary Fund (IMF) has asked the Central Board of Revenue (CBR) to review the decision of levying of 0.1 per cent withholding tax on cash withdrawals from banks.

Informed sources at the finance ministry told Dawn on Friday that the Fund’s technical team during a recent meeting with tax officials had questioned their claim of generating an easy amount of more than Rs5 billion from the levy during the current fiscal year.

The sources said the IMF had urged the CBR to revisit the decision, as they suspected that the levy would not generate much revenue as was projected in the budget 2005-06.

A senior CBR official told Dawn that the board had yet to develop a separate heading for the collection of the levy from banks across the country. When asked for the revenue generated under this head during the first two months of the current fiscal year, he said the CBR did not have any consolidated and exact information about the collection of revenue from the levy.

He said that during the next few months the CBR in collaboration with representatives of banks would chalk out a separate heading for the collection of the levy from the customers.

The sources said that the government had imported a half-baked concept of banking cash transaction tax from India to generate revenue without going into its intricacies and practicability into Pakistani society.

According to them, some of the banks had also shown reservation over the levy, as it had increased burden on their employees.

“It is the routine practice that most of the people withdraw their amount through a number of cheques to keep it below the threshold limit of Rs25,000, which has overburdened the staff,” a bank official said.

He said that the levy would also discourage the process of documentation of the economy started by the present government, as it would encourage the people to keep their money off the banks.

The official said that banks had not received any information from the CBR about the timeframe for depositing the tax and giving a certificate of tax deduction to an account-holder on demand at any time during the year.