Islamabad, September 28, 2024 – In a decisive move aimed at intensifying its crackdown on tax evasion, the Federal Board of Revenue (FBR) is poised to redefine the term “non-filers” under the Income Tax Ordinance, 2001.
This amendment is expected to provide legal clarity, empowering the FBR to take stringent actions against individuals and entities circumventing their tax obligations.
According to informed sources, the FBR is preparing to present its recommendations to the government, advocating for amendments to the non-filer status through legislative approval. This shift is part of the FBR’s broader campaign to crack down on non-compliant taxpayers, particularly those who declare “nil” income in their tax returns to exploit the active taxpayer status while evading legitimate tax contributions.
In the tax year 2023, the FBR received approximately six million tax returns, of which 2.5 million filers reported zero income. These individuals are suspected of deliberately misrepresenting their financial status to benefit from reduced rates of withholding tax. The FBR is now resolute in its commitment to pursue such tax evaders, with the ultimate goal of bolstering the country’s revenue streams.
This crackdown is also fueled by the FBR’s pressing need to address an anticipated revenue shortfall for the current fiscal year. Reports indicate that the FBR is likely to miss its target by Rs 170 billion in the first quarter of FY 2024-25 (July-September). To mitigate this shortfall, the FBR has set a formidable revenue collection target of Rs 2,652 billion for the quarter and is expected to collect between Rs 2,480 billion to Rs 2,490 billion by the end of September. However, substantial efforts are required to close this gap, especially as corporate sector advance tax payments are due this month, which could potentially contribute Rs 50 billion.
A senior FBR official confirmed that a comprehensive strategy has been finalized to meet the first-quarter targets, and the upcoming enforcement measures are pivotal to these efforts. High-level government directives have tasked the FBR with drafting rules for an ordinance that will facilitate harsher enforcement actions against non-filers and those misreporting income. The objective is to meet the annual tax collection goal of Rs 12,915 billion for FY 2024-25.
Furthermore, Prime Minister’s recent endorsement of the FBR’s transformation plan underscores the government’s commitment to tax reform. The plan includes measures to abolish the non-filer category and restructure unregistered business entities, signaling an aggressive approach towards tax compliance. A summary has been submitted to the cabinet, and the FBR will soon issue new rules, reclassifying the definition of non-filers while moving the Tax Policy Wing under the Ministry of Finance.
