FBR Eyes Tighter Car Ownership, Broader Tax Net in New Budget Proposals

Federal Board of Revenue (FBR) is evaluating proposals to strengthen tax collection and combat benami (anonymous) transactions for the upcoming 2024-25 budget.

Cracking Down on Benami Car Purchases:

  • A cap on car ownership per taxpayer (proposed limit: 10 cars) is being considered to prevent non-filers from exploiting filers’ statuses for vehicle registration. This aims to curb benami transactions and tighten regulations in the auto sector.

Expanding Tax Reach Beyond Cars:

  • Proposals extend to real estate and agriculture:
    • Real estate tax: Unlocking an estimated Rs. 50 billion by taxing just 10% of the untaxed potential in this sector.
    • Agriculture:
      • Stricter enforcement of existing tax laws.
      • Federal tax return with wealth reconciliation, even if taxes are paid provincially. This targets “whitening” of untaxed money in the sector.
      • Increased focus on enforcing wealth statements, already a mandatory requirement.

Promoting Transparency and Compliance:

  • Publicizing tax payments of prominent restaurants to ensure accurate income tax reporting and encourage compliance across sectors perceived to under-report earnings.

Preventing Registration Abuse:

  • Disallowing deregistration from income tax within five years (except for death/bankruptcy) to stop individuals from registering solely for lower withholding tax rates and then evading future filings.

Enforcing Compliance Through Travel Restrictions:

  • Blocking passports of tax registrants who fail to file returns for three consecutive years, pressuring them towards tax compliance.

A Broader Strategy for Fiscal Health:

These proposals represent a multi-pronged approach by the FBR to:

  • Tighten tax regulations.
  • Close loopholes for tax evasion.
  • Increase tax collection efficiency.
  • Broaden the tax net.
  • Promote economic equity.

The proposals will be further reviewed and refined as budget finalization progresses, ensuring alignment with Pakistan’s economic needs.

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