Govt Has Decided to Completely End Concept of Non-Filers: FBR Chairman

Chairman Federal Board of Revenue (FBR) Rashid Mahmood said that the government has decided to completely abolish the concept of non-filers of income tax returns from the tax laws. In this regard, FBR Charmin gave a detailed presentation to leading business and trade groups at the FBR Headquarters on measures to convert the cash economy into a documented economy.  The measures would also reduce the existing tax gap of Rs. 7.1 trillion. The FBR has invited businessmen from all main industries to a briefing on the planned FBR transformation plan. Ali Pervez, the State Minister for Finance and Revenue, attended the meeting with senior tax managers and FBR Members. FBR Chairman Rashid Mahmood Langrial and Member Inland Revenue (Policy) Dr. Hamid Ateeq Sarwar gave a presentation to the business community. FBR Chairman said that FBR has no choice, but to end the menace of non-filling or nil-filing of returns. “Non-filer will not exist in our books or non-filers will be non-existent in future. There would be no concept of non-filers in the future”, he added. The government is going to abolish the category of non-filers and it would also disallow the use of cheques for cash withdrawals beyond a certain threshold, FBR Chairman Rashid Langrial informed the participants. Earlier, the plan was to only ban the purchase of assets by the non-filers. But now the government would delete the definitions of non-filers, and later abolish the schedule 10th from the Income Tax Ordinance. He categorically said that if the situation did not improve, it would be impossible for the government to collect taxes even with new tax measures. To increase the tax-to-GDP ratio, drastic steps are being taken to reduce the burden on existing taxpayers. He said that the high tax rates would dissuade enterprises from staying in Pakistan, as has happened in the textile industry. He went on to say that high tax rates for the salaried class will force highly skilled individuals to leave Pakistan. The FBR would establish disincentives for non-compliant taxpayers, beginning with registration and tying the availability of facilities such as investments and the creation of bank accounts to the filing of tax returns. There will be no monetary transactions, and the source will have to be established via different digital interventions. The FBR chairman stated that non-filing is a fraud method that was established domestically. “We must do away with the concept of non-filers. There is an agreement to eliminate this idea,” the chairman stated, adding that the FBR will create extra facts to assess people’s financial transactions. At the registrar’s office, property transactions will be linked to two categories: eligible and ineligible. A presentation slide of FBR revealed Tiers of taxpayers based on the filed amounts, earning income more than Rs. 10 million or income less than Rs. 10 million, etc. Based on these filed amounts, taxpayers would be able to purchase motor vehicles, purchase immovable properties, make investments in securities, mutual funds, and money market instruments, or operate bank accounts except Assan Account and also specified per person annual cash deposit/withdrawal limit (Rs. 30 million per year). The reforms will include a cap on cash cheque issuance. The FBR will provide information to all banks based on people’s declared incomes in tax returns and construct a specific limit; any crossing of that red line for financing transactions will be reported to the FBR. This system will be in place in a few months.