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Aftab Maken
ISLAMABAD: The Federal Board of Revenue (FBR) is proposing stringent measures, including requiring FBR approval for future stock market investments by all, and outright barring non-filers from stock market participation. These proposals, discussed during a recent meeting of the Senate Standing Committee on Finance chaired by Senator Saleem Mandviwalla, signal a major shift in Pakistan’s tax policy.
Non-Filers Face Steep Penalties and Restrictions
The committee has approved a dramatic increase in the tax rate on property purchases by non-filers, soaring from 130% to a staggering 500%. This move, alongside proposed restrictions on property and vehicle purchases for non-filers in the upcoming budget, underscores the government’s commitment to bringing more individuals into the tax system. Finance Minister Muhammad Aurangzeb reiterated that penalties for non-filers were significantly increased last year, with ongoing efforts to broaden the tax base. Senator Mohsin Aziz even suggested a cap for non-filers, proposing that a non-filer with PKR 10 million should only be allowed to purchase property worth PKR 50 million.
Spotlight on Unregistered Tax Deductions and Industrial Concerns
During the session, Senator Shibli Faraz raised critical concerns regarding media houses failing to deposit taxes deducted from employee salaries with the FBR. This highlights a broader issue of tax compliance across various sectors.
Meanwhile, representatives from the steel industry voiced their apprehension over proposed tariff reforms, warning of potential industry closures and requesting a one-year postponement. Finance Minister Muhammad Aurangzeb assured the committee that these reforms would be implemented over a five-year period, with a high-level committee, formed under the Prime Minister’s instructions, overseeing implementation and addressing related issues.
Clubs and Online Education Under the Tax Scanner
In a surprising development, the FBR Chairman, Rashid Langrial, announced that income generated by clubs would now be subject to taxation. This proposal, initially met with opposition from Committee Chairman Saleem Mandviwalla, gained support from other members, including Minister of State for Finance Bilal Azhar Kayani, who noted that tax would only apply if income exceeded expenses and highlighted that this issue “concerns the privileged class.” FBR officials justified the move by stating that such clubs primarily serve a limited, elite population.
Furthermore, the committee has approved a proposal to impose taxes on online educational institutions and academies. FBR Chairman Langrial revealed that some online academies are earning up to PKR 20 million per month, emphasizing that teachers earning through online platforms must also pay their due taxes.
Salaried Class and Tax Relief Discussions
Amidst the wide-ranging discussions, Senator Shibli Faraz advocated for tax exemption for annual salaries between Rs 600,000 and Rs 1.2 million, arguing that a monthly salary of Rs 100,000 is effectively worth only Rs 42,000 in the current economic climate.
These comprehensive discussions on the stock market, industrial policy, and FBR oversight demonstrate the government’s renewed commitment to establishing a transparent, fair, and effective tax system through stringent measures. The upcoming budget is expected to formalize many of these proposed changes, impacting a broad spectrum of the Pakistani economy.
