ISLAMABAD: In a major move, the government has decided to do away with the non-filers category and force everyone to use banking channels for all transactions in an effort to reduce the amount of cash flowing through the economy.
“We have to discard the idea of non-filers. During a consultative meeting on the organization’s proposed transformation plan on Tuesday, FBR Chairman Rashid Mahmood Langrial informed the representatives of all major industries that there is agreement to abandon this notion.
He claimed that non-filing is a fraudulent technique that was developed domestically and that more data will be generated by the FBR in order to evaluate people’s financial transactions. Property transactions will be divided into two categories at the registrar’s office: eligible and ineligible.
Business executives from the primary industries were invited by the FBR to a briefing on its transformation plan. Dr. Hamid Ateeq Sarwar, Member of Policy at IRS, and Minister of State for Finance and Revenue Ali Pervez also attended.
To reduce cash movements in the economy, people will have to route transactions through financial systems.
Speaking to the participants, Mr. Langrial stated that the FBR must resolve the problem of returns that are either not filed at all or not filed at all. Even with new taxation tactics, he warned, the government will not be able to collect taxes if the situation does not improve.
He added that high tax rates for the salaried class will force highly skilled people to leave Pakistan, citing the textile industry as evidence that high tax rates will deter businesses from staying in the nation.
The Pakistan Textile Exporters Association’s patron-in-chief, Khurram Mukhtar, recommended using desktop and digital surveys to map out the nation’s manufacturing environment in all sectors. In order to make well-informed decisions and accurately analyze tax potential, this method will enable the collection of sector-specific data on capacity, output, and firm types.
Making a distinction between taxpayers who comply and those who do not is necessary. All advantages will go to compliant taxpayers, and as the compliance base grows, rates will go down.
The FBR informed the gathering that it would create incentives for taxpayers who are not in compliance, beginning with registration and tying access to resources like bank accounts and investments to the completion of tax forms. There won’t be any financial transactions, and different digital interventions will be required to determine the source of monies.
While the FBR received over Rs423 billion in unclaimed withholding taxes in 2023, non-filers paid Rs20 billion in taxes. This is a hazy area that requires investigation and clarification.
A cap on the issue of cash checks is one of the improvements. Based on taxpayers’ declared incomes in their tax forms, the FBR will supply data to all banks and set a ceiling; any financing transactions that go over this amount will be reported to the FBR. It is anticipated that this system will go into effect in a few months.
The FBR was instructed by Ziad Bashir of Gul Ahmad to adequately inform the public about the intended actions. He emphasized that the FBR should not move quickly and that the public should be informed of any changes in an efficient manner.
The discussion brought attention to the possible tax gaps in twenty different industries. The textile sector had the biggest gap, estimated at Rs700 billion, followed by the cement sector at Rs100 billion. The textile association’s representatives, however, disagreed with the FBR’s estimates of the tax shortfalls.
Sheikh Waqar Ahmed of Nestle Pakistan suggested to the FBR the proper application of current legislation. Nonetheless, a large number of entrepreneurs credited the government’s political will to close the tax gap and lessen the cash economy for the majority of the proposed measures in the FBR reform plan.
