The Pakistan Business Council (PBC) has proposed increasing the burden on non-filers of income tax in the upcoming budget 2023-2024.
This is intended to broaden the tax base and increase overall tax collection. Specifically, the PBC has recommended implementing the policy of increasing tax on non-filers / unregistered persons in several areas, including:
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a) Increasing the rate of advance income tax on purchase of immovable property by non-filers to 7% (currently at 4%), and ensuring that private housing societies and housing towns collect this tax when changing the owner’s name in their records.
b) Clarifying that the tax on deemed rental income on land and property (currently only collected from filers) should also be accrued on non-filers in urban and semi-urban areas, and collected by land registering and transfer authorities when transferring land.
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c) Increasing the rate of advance income tax on electricity and gas bills for unregistered industrial and commercial entities (not having STRN) to 20% if the monthly bill is above Rs one lakh, and increasing the rate of advance income tax on domestic connections in the name of non-filers to 20% if the monthly bill is over Rs. 100,000.
d) Levying withholding/advance income tax at 20% for non-filers on local and international business class air tickets, instead of the current FED of higher of Rs. 50,000 or 20%.
e) Increasing the amount of annual advance income tax applicable to non-filers (under section 234) to Rs. 250,000 for owners of vehicles of 2000cc and above.
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f) Increasing the existing advance income tax on purchase of cars by non-filers (under section 231B) based on the engine capacity of the vehicle.
g) Allowing exemptions under the Income Tax Law only to filers, and barring non-tax filers from using Pakistan-issued credit cards to buy goods/services in foreign currency.
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h) Imposing withholding tax on withdrawals above Rs. 50,000 in a single day from bank accounts of non-filers.
Overall, the PBC’s proposals aim to incentivize non-filers to become filers and increase tax collection in Pakistan.
