FBR Chairman Announces Tough Measures to Boost Tax Revenue

Pakistan is taking significant steps to enhance its tax revenue in the upcoming 2024–25 budget. The Federal Board of Revenue (FBR) chairman has unveiled a plan to disconnect power and gas services, as well as SIM cards, of individuals who do not file their taxes. The Senate's Standing Committee on Finance and Revenue has given the green light to a proposal that restricts foreign travel for non-filers. These decisions were made during a recent Senate session chaired by Saleem Mandviwalla to penalize those who neglect their tax obligations.

FBR Chairman Zubair Tiwana emphasized that non-filers will face penalties under the Income Tax General Order (ITGO). However, certain groups like individuals going for Hajj and Umrah, children, students, and NICOP holders will be exempted. Tiwana cautioned that non-filers risk losing access to their SIM cards, gas, and electricity connections, and may even face closure of their businesses.

Senator Farooq H. Naek from the Pakistan Peoples Party (PPP) highlighted the importance of imposing travel restrictions on non-filers similar to those on the exit control list (ECL). Tiwana revealed that non-filers will be subject to a higher withholding tax rate, with over 500,000 individuals earning more than $2 million annually listed as non-filers. These individuals have already submitted their income statements and tax returns.

A senior officer at FBR mentioned that temporary filers will need to pay higher taxes when buying vehicles, land plots, and homes. Furthermore, the Senate has approved measures to reduce the wage threshold, raise taxes, and impose a 75% withholding tax on non-filers' cellphone and internet bills. Finance Minister Muhammad Aurangzeb stressed the importance of expanding the tax base, citing the current tax-to-GDP ratio of only 9.5% as insufficient for effective government operations.

The Pakistani government's efforts to enhance tax collection through stringent measures targeting non-filers reflect a commitment to strengthening the country's financial system. These initiatives aim to promote tax compliance and ensure a fair distribution of the tax burden among citizens. By broadening the tax base and enforcing penalties on non-filers, Pakistan is striving to improve its fiscal sustainability and support essential public services for its people.