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ISLAMABAD: The Federal Board of Revenue (FBR) has decided to strictly monitor budgetary measures introduced under the Finance Act 2022 to increase the cost of non-filers and raise additional revenue in the second quarter (October-December) 2022-23.

Sources told Business Recorder that one of the guiding principles for the budget (2022-23) was the higher cost to non-filers. The rates of withholding taxes were substantially enhanced for non-filers of income tax returns.

In this connection, new measures were introduced in the last budget (2022-23). However, some measures need to be fully enforced in the remaining period of the current fiscal year. The FBR is strictly monitoring all measures introduced for persons not appearing on the active taxpayer's list of the FBR.

For example, the government had increased the tax rate from 100 percent to 250 percent in case of the purchase of property by persons who are not active taxpayers. Similarly, there is an increase in the tax rate of 200 from 100 percent in case of purchase of motor vehicles by persons who are not active taxpayers. The revenue impact is Rs 20 billion for increase in rate of advance tax on purchase of immoveable property by non-ATL persons from existing 2% to 5%.

FBR: dismal income tax collection

Currently advance tax on passenger transport vehicles plying for hire is collected on the basis of seating capacity of vehicle by Excise and Taxation authorities. The rates of adjustable advance tax on such vehicles provided in Division III of Part IV of First Schedule of the Ordinance have been enhanced by substituting the Table in the following manner. In case of a person not appearing on Active Taxpayers List, rate of tax has been increased by 100 percent under rule 1 of Tenth Schedule to the Income Tax Ordinance.

In case of purchaser of immovable property who is not appearing on the Active Taxpayers List, rate of tax to be collected under section 236K will increase by 250 percent of the rate specified in Division XVIII of Part IV of First Schedule. Necessary change has been incorporated in rule 1 of Tenth Schedule to the Income Tax Ordinance.

Through Finance Act 2022, the section 236Y has been reinserted. Every banking company will collect this adjustable advance tax at the time of remitting money outside Pakistan on behalf of a person who has completed a credit card, debit card or prepaid card transaction with a person outside Pakistan. The rate will increase by 100 percent in case of persons not on Active Taxpayers List.

In case of a person not appearing in ATL, the advance tax on motor vehicles collectible under this section will increase by 200 percent. Necessary change has been incorporated in rule 1 of Tenth Schedule of the Income Tax Ordinance.

Copyright Business Recorder, 2022

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