PTBA Pushes for Reforms in Direct & Indirect Taxation – Finance Bill 2024

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.

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