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ISLAMABAD: Major changes are expected in tax laws through the Finance Bill 2024 to increase the cost of financial transactions of the non-filers of income tax returns and introduce enforcement measures of Rs 300-400 billion in 2024-25.

The Finance Bill 2024 would also enhance powers of the Directorate General of Digital Invoicing, Federal Board of Revenue (FBR) to document supply chains of all major businesses.

In this regard, the FBR has drafted set of budget proposals to document economy for the next fiscal year.

Finance Bill 2024: Policy Cell to compile IR budget proposals

To remove discrimination, there is a possibility that the FBR may introduce a single turnover-based registration threshold for all businesses.

The government may implement an overseas vendor registration regime requiring foreign supplier of goods to consumers in Pakistan to register for and collect federal sales tax.

The government may impose a positive duty on input tax claimants to ensure that they are not participating in Missing Trader Fraud arrangements and to report suspicious transactions, with the threat of penalty/ prosecution.

The FBR has proposed uniform changes in Sales Tax Act, Income Tax Ordinance and Federal Excise Act.

According to sources, the FBR has proposed to raise withholding taxes for non-filers specifically on cash withdrawal from the banks by non-filers from 0.6 percent to 0.9 percent to generate additional revenue of Rs 15-20 billion during 2024-25.

On the sales tax side, supplies to un-registered persons would be made costly for the business community.

The proposal is part of the government’s policy to penalise non-filers of income tax returns.

Presently, over Rs 50,000 cash withdrawals by non-filers, in a single day, through credit cards/ ATMs are also be subjected to 0.6 percent withholding tax.

“The present personal income tax rate structure presents several problems. First, while the marginal income tax rate structure is largely progressive, it is only applied to certain types of income, leading to inequities between taxpayers who earn different types of income.

Second, the more preferential tax rates applicable to salaried individuals (as compared to non-salaried individuals) means that individuals could be incentivised to characterize their income as employment rather than business, which may present administrative challenges as it is often not easy to determine if a case falls within an employer-employee or a customer-consultant relationship.

This problem extends to any differences in the final tax burdens imposed on different types of income under the present schedular system, as taxpayers can be expected to engage in tax planning and restructuring to ensure that their income fits within the most tax advantageous category.

Such activities impose economic dead-weight losses as resources are diverted into unproductive planning activities and may cause serious economic inefficiency as taxpayers opt for income-earning activities that may be less efficient, but more lightly taxed,“ sources added.

Copyright Business Recorder, 2024


Comments are closed.

KU May 27, 2024 03:11pm
Reality of lies by FBR is the consistent protection of thousands of businesses n retailers from tax net, the gratifications/bribes is in hundreds of billions, while more lie-fests destroys country.
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Tariq May 27, 2024 05:27pm
FBR is only good at taxing salaried class and increasing WHT. If government runs from at source deductions by business FOR FBR why do we need FBR?? Enough of this!
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Kaleem Ahmad May 27, 2024 05:55pm
On the contrary, I as a salaried person envy traders because their rent, travel, medical and servant wages are tax deductible while mine are not
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Khadim Hussain May 27, 2024 06:21pm
Whenever govt and its officers did not stop luxury and over expenditures, people will not pay the tax.
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Enver Al Ferzan May 27, 2024 08:07pm
-Non-filer should suffer rate to increase from 100% to 150% /200%. Tax payers be given preferential treatment at Government hospitals and other Government offices as these are run from taxpayer money
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Kamran May 27, 2024 09:31pm
Earning 800k/month have to pay 26 Lacs income tax yearly, same freelancer earning 800k/month have to pay 26k yearly. What a disgrace to tax payers.
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AS May 28, 2024 10:38am
Why there be a category as non filer for people buying cars and property? any one doing so must be a filer which will bring lot of people into tax network.
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Kashif May 28, 2024 11:46am
@KU, FBR should explore more avenues particularly agricultural based income.
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Arshad Farooq May 28, 2024 01:02pm
@Kaleem Ahmad , only business expenses are allowed, personal expenses are not allowed
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Ahmer Shabbir May 28, 2024 02:11pm
I believe that great step to increase WHT for non filers .
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Enver Al Ferzan May 28, 2024 04:19pm
@Kamran , Any free lancer bring in $ revenue is give a level playing field as Exporter in the country
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