No more free rides — govt to end tax perks for dormant filers

ISLAMABAD (HUM NEWS): Pakistan’s income tax filers who have not paid any income tax over the past two to three years will be targeted for closer scrutiny in the coming months as the government finalizes its taxation plan for the new budget, a senior government official has told HUM NEWS.

The decision to focus on such individuals among planned changes in the budget, has followed a close analysis of the trends in the past five years.

At present, there are just over 6.6 million Pakistanis who have registered themselves with the income tax department as tax filers. This segment already represents less than three per cent of Pakistan’s population.

But more than 40 per cent of such filers have used their status to pay concessional charges while purchasing new cars or properties, without contributing additionally to tax collections. Under Pakistan’s income tax rules, individuals who registered themselves as filers paid half the tax than non-filers.

The policy of a distinction between filers and non-filers was first introduced in 2014 during the tenure of former Nawaz Sharif as the prime minister in his last term. It was done with the intention of improving compliance with Pakistan’s income tax rules, by offering incentives for individuals who registered themselves officially.

Yet, the record has shown that individuals, who registered themselves as income tax filers, largely did so to gain available concessions rather than becoming regular income tax payers.

Under a new scheme expected to be introduced in the new budget, the distinction between filers as opposed to non-filers will be removed. In the past, the IMF, which has influenced Pakistan’s economic decision-making, has objected to the creation of any loophole that allows individuals to evade their tax obligations.

Senior government officials have told HUM News, the data of tax-filers available with the federal board of revenue, will allow the income tax department in the coming months to pursue income-tax filers who have not become regular income tax payers.

In the past, stakeholders from sectors such as real estate dealers and car sellers have opposed plans to narrow the community of those who can invest in buying new assets. But the large scale incidence of income tax evasion in Pakistan, has finally convinced the government of prime minister Shehbaz Sharif and the IMF to seek an end to all loopholes that allow tax evasion.