The Pakistan Tax Bar Association (PTBA) has unveiled a comprehensive set of proposals for the upcoming 2024-25 national budget, with a strong emphasis on digitalizing the country’s tax system. The PTBA believes this digitalization is essential for creating a tax-compliant and financially sustainable Pakistan.
PTBA’s Recommendations for Budget 2024-25
The association’s detailed recommendations encompass reforms in both direct and indirect taxation, alongside broader administrative changes. Here’s a breakdown of the key proposals:
- Direct Taxation:
- Taxing all forms of income, potentially increasing taxpayers to 50 million.
- Uniform tax rates for salaried individuals.
- 10% tax on pensions exceeding PKR 100,000 per month.
- Elimination of holding period for capital gains tax on property transactions.
- Abolishment of Section 7E (tax exemptions on certain income) and Capital Value Tax (CVT) on foreign assets.
- “Mirror policy” for tax notices: FBR can only issue notices for data mismatches.
- Indirect Taxation:
- Point-of-sale systems for all businesses with a uniform 6% tax rate.
- Reduced tax rate for online and digital transactions (credit/debit cards).
- Digitalization of Tax System:
- Leverage Artificial Intelligence (AI) for improved tax collection and transparency.
- Implement digital invoicing across the supply chain.
- Utilize National Database and Registration Authority (NADRA) for enhanced digital tax collection.
- Establish a new oversight mechanism to strengthen FBR governance.
Overall Impact
The PTBA’s proposals aim to modernize Pakistan’s tax landscape through digitalization. This strategy has the potential to:
- Expand the Tax Base: Bring more individuals and businesses under the tax umbrella.
- Enhance Tax Compliance: Reduce tax evasion and generate consistent revenue streams.
- Improve Transparency: Increase accountability in tax collection and spending.
- Boost Economic Growth: Provide the government with resources for crucial social and infrastructure projects.
A Look Ahead
As Pakistan embraces digitalization in its financial systems, the PTBA’s budget proposals offer a roadmap for a more robust and prosperous future. The focus on digital transformation is not just a trend, but a necessary step towards greater fiscal responsibility and economic growth.
