BeNewz
Related Articles
Aftab Maken
ISLAMABAD: The government has decided to tighten the noose around individuals and businesses not registered with the Federal Board of Revenue (FBR). The proposed actions include banning such persons from operating bank accounts and disconnecting their electricity and gas connections. However, the National Assembly’s Standing Committee on Finance has conditionally approved this plan.
The committee met on Thursday under the chairmanship of Syed Naveed Qamar, where FBR Chairman Rashid Mahmood Langrial gave a detailed briefing. He stated that under sales tax regulations, any unregistered businessperson will not be allowed to maintain a bank account. A notice will be issued before any such account is closed.
He further explained that once the individual registers with the FBR, their account will be reactivated within two days. Similarly, electricity and gas connections of non-registered Tier-1 retailers will be disconnected.
The FBR Chairman revealed that there are about 300,000 industrial units in Pakistan, out of which only 30,000 to 35,000 are currently registered. He also acknowledged that the tax rate in Pakistan is high, and mentioned that nearly Rs 500 to 600 billion worth of electricity theft takes place every year.
He pointed out that a large number of people remain outside the tax system, and even those who file returns often underreport their actual income.
In response to a question from the committee chairman about how the FBR would identify unregistered individuals, Langrial said that those businesses already paying income tax are eligible for sales tax registration, and their income data would be used to assess their status.
He added that action against unregistered individuals would be based on estimates related to their sales, supply, and business volume.
During the discussion, Committee Member Javed Hanif supported the FBR’s proposed sections. However, Chairman Syed Naveed Qamar cautioned that laws should not end up targeting the wrong people.
Langrial further said that many individuals who fall under the tax net do not file returns. Only one-third of manufacturers are registered for sales tax, and even among those, under-filing is widespread.
Committee Member Sharmila Faruqui suggested offering incentives instead of increasing penalties. She noted that existing punishments have not been effective, and encouraging taxpayers through benefits and lowering tax rates would help expand the tax net.
Finance Minister Muhammad Aurangzeb told the committee that the threshold and process for tax registration would be further improved. He made it clear that tax exemptions and amnesties are a thing of the past, and the focus now is on bringing more people into the tax system.
Langrial also said that many businesses in Pakistan operate with models based on sales tax evasion. The committee directed the FBR to include safeguards before enforcing any account closures of unregistered individuals.
He requested that the FBR be allowed to temporarily deactivate bank accounts, while permanent closures should be decided by a separate committee. He assured the committee that revised drafts including safeguards would be shared soon.
The National Assembly’s Finance Committee officially directed FBR to incorporate these safeguards before proceeding with the proposed action against non-filer bank accounts.
During the same session, the committee also approved a proposal to impose a 5% tax on foreign online platforms.
In addition, the committee approved a Rs 2.50 per liter petroleum levy, which will take effect from July 1. According to the Petroleum Secretary, this move is expected to generate Rs 45 billion in revenue.
He further informed the committee that from next year, there is a proposal to increase the levy to Rs 5 per liter.
