Connect with us

Hi, what are you looking for?

Economy

Government Considers Additional Taxes on Non-Filers

Non-Filers

The government is planning several significant changes to tax laws in the upcoming Finance Bill 2024, which include increasing the cost of financial transactions for non-filers of income tax returns. This move aims to generate an additional Rs300 to Rs400 billion in revenue for the 2024-25 fiscal year.

The Bill proposes to enhance the powers of the Directorate General of Digital Invoicing, Federal Board of Revenue (FBR), to document the supply chains of all major businesses, according to a report by Business Recorder.

Earlier this month, local reports suggested that taxes on cash withdrawals from banks could be increased in the next budget.

This suggestion was discussed during negotiations between Pakistani authorities and the International Monetary Fund (IMF) team. An estimated Rs15 billion is expected to be collected annually through the advance tax on cash withdrawals.

Additionally, there is a possibility of increasing taxes on income from non-essential and luxury items in the upcoming budget. Last week, the global lender indicated that significant progress had been made between the IMF mission and Pakistan towards reaching a staff-level agreement for an extended fund facility.

“The mission and the authorities will continue policy discussions virtually over the coming days aiming to finalise discussions, including the financial support needed to underpin the authorities’ reform efforts from the IMF and Pakistan’s bilateral and multilateral partners,” stated IMF Mission Chief Nathan Porter.

The government is likely to introduce a single turnover-based registration threshold for all businesses, eliminating previous discriminatory practices. Additionally, an overseas vendor registration regime might be implemented, requiring foreign suppliers of goods to Pakistani consumers to register and collect federal sales tax.

Moreover, the ruling party plans to impose a “duty” on input tax claimants to ensure they are not involved in missing trader fraud and to report suspicious transactions, with penalties for non-compliance.

The FBR has also proposed raising the withholding tax on cash withdrawals by non-filers from 0.6% to 0.9%, which is expected to generate Rs15 to Rs20 billion in extra revenue. Cash withdrawals exceeding Rs50,000 in a single day by non-filers through credit cards or ATMs will also be subjected to a 0.6% withholding tax.

The government intends to make supplies to unregistered persons more costly for the business community. These measures aim to penalise non-filers of income tax returns and address issues with the current personal income tax structure, which incentivises characterising income in specific ways to minimise tax burdens.

It is worth noting that the government’s drive to tighten the noose around non-filers has been ongoing. In April, the FBR ordered the Pakistan Telecommunication Authority and telecom operators to block 506,671 mobile phone SIMs of non-filers.

The Income Tax General Order was issued to disable the mobile phone SIMs of individuals “who are not appearing on the active taxpayer list but are liable to file the Income Tax Return for Tax Year 2023 under the provisions of the Income Tax Ordinance, 2001”.

On May 22, Islamabad High Court Chief Justice Aamer Farooq confirmed that the government’s decision on blocking SIMs was still in effect, indicating the government’s commitment to enforcing these new tax measures.

Written By

I am a dynamic professional, specializing in Peace and Conflict Studies, Conflict Management and Resolution, and International Relations. My expertise is particularly focused on South Asian Conflicts and the intricacies of the Indian Ocean and Asia Pacific Politics. With my skills as a Content Writer, I serve as a bridge between academia and the public, translating complex global issues into accessible narratives. My passion for fostering understanding and cooperation on the national and international stage drives me to make meaningful contributions to peace and global discourse.

Breaking News

Advance Salaries The Punjab government has announced that public sector employees will receive their salaries in advance ahead of Eid ul-Adha 2024. This decision,...

Entertainment

ISLAMABAD: Self-proclaimed singer Chahat Fateh Ali Khan’s viral song ‘Bado Badi’ has been removed from YouTube after amassing over 28 million views. The song...

Sports

"I believe I'm the first in my family to have a love marriage," he said. "At that time, I was confident that whatever I...

Breaking News

ISLAMABAD: The Russian Embassy in Islamabad announced that it is “closely following” developments in Pakistan, including political events and court decisions. “However, we believe...