The proposed budget for the upcoming fiscal year introduces the concept of different tax rates for filers and non-filers, with the intention of increasing the tax base in Pakistan. Currently, only 30% of business individuals are paying their taxes, and the government needs to address the remaining 70% of the community.
One of the major issues in the current tax system is the huge amount of tax collected from non-filers, which is not properly documented. As a result, non-filers have passed this burden of tax to the end consumers, which has further complicated the situation.
To increase the tax base, several proposals have been made in the budget. Firstly, for unregistered industrial and commercial entities, sales tax should be increased from 17% to 30%. After the collection of this extra tax for six months, these entities should be provisionally registered for National Tax Number (NTN) and Sales Tax Registration Number (STRN).
Moreover, utility companies should issue notices where the annual bill exceeds 2.4 million rupees, and the provisional registration should be converted to permanent. If the consumers do not comply, the utility connections must be disconnected.
Another proposal is that all electricity providing companies should ensure to get NTN from their consumers within one year of supply. This will help in identifying non-filers and bring them under the tax net.
Advance tax of 7.5% is collected from non-filers where the electricity bill is below Rs. 25,000. The rate should increase to 30% where the bill is greater than Rs. 75,000. This will incentivize non-filers to register themselves and start paying their taxes.
All exempt incomes should be for filers only, so the full income is reported. This will help in ensuring that all income is taxed, and no one can evade their tax liability.
Moreover, the advance income tax on vehicle purchase or transfer should be increased three times. Similarly, the advance income tax on the transfer of property for non-filers should be increased to 10%. This will discourage non-filers from indulging in transactions that are not properly documented.
It is imperative for the government to implement these proposals to increase the tax base and bring more individuals under the tax net. This will not only help in increasing revenue but also create a fair and transparent tax system in Pakistan.
In conclusion, the proposed budget highlights the need to introduce different tax rates for filers and non-filers to increase the tax base in Pakistan. The proposals made in the budget aim to discourage non-filers from evading taxes and incentivize them to register themselves and start paying their taxes. The implementation of these proposals will create a fair and transparent tax system in Pakistan.