ISLAMABAD, September 25, 2024 — The Federal Board of Revenue (FBR) is preparing to introduce stricter curbs on non-filers of tax returns, aiming to prevent them from engaging in various financial and commercial transactions.
These measures are expected to be part of a new money bill that will be presented in the coming weeks, as part of the government’s broader efforts to increase tax compliance and boost revenue.
FBR Chairman Rashid Mahmood Langrial revealed that the new restrictions will target non-filers by prohibiting them from purchasing property, buying cars, investing in mutual funds, opening current accounts, and engaging in international travel, with the exception of religious pilgrimages. These moves are intended to eliminate the non-filer category, a mechanism that previously allowed individuals to avoid full tax obligations by paying nominal fees on transactions.
Under the proposed measures, 15 specific activities will be restricted for non-filers, with an initial focus on five key areas. These restrictions will gradually be rolled out over the next few months as part of the FBR’s broader transformation plan, which has already received approval from the prime minister.
“Non-filers will no longer be able to evade taxes by paying minimal fees,” Langrial said during a consultative meeting with business leaders on Tuesday. He emphasized that the concept of non-filers is outdated and does not exist in most countries. “Our focus will shift to compliant versus non-compliant taxpayers, using machine learning and advanced algorithms to identify individuals who are not filing their tax returns.”
The FBR’s new approach aims to close the gap between the fees collected from non-filers and the potential tax revenue that could be raised from these individuals. Last year, only Rs25 billion was collected from non-filers, while much higher sums went uncollected.
Implementation Strategy
The restrictions on non-filers are expected to be enforced through an ordinance, with the FBR already working on drafting the necessary rules in consultation with the law ministry. These new measures will gradually be phased in, giving individuals time to adapt, according to the FBR chairman.
Under the new regulations, non-filers will also be barred from opening standard bank accounts, although basic accounts for low-income individuals will still be allowed. Additionally, the FBR is collaborating with the State Bank of Pakistan to track individuals whose income levels do not match their transaction volumes, allowing commercial banks to report such discrepancies.
Crackdown on Smuggling and Cash Transactions
To further strengthen tax compliance, the FBR is enhancing its automation and increasing manpower at critical border points to combat smuggling. Langrial also mentioned new efforts to limit the use of bank cheques as a form of alternative currency in certain sectors, ensuring that economic activities are more closely linked to banking operations.
These initiatives, according to the FBR chairman, are designed to create disincentives for non-compliance while encouraging more individuals to become compliant taxpayers.
