FBR Introduces New Measures to Address Tax Non-Compliance

The Federal Board of Revenue (FBR) in Pakistan has unveiled a series of reforms aimed at improving tax compliance and reducing the burden on individuals who are not required to file tax returns. These measures include the introduction of a new "family" category, exemptions for low-income earners and overseas Pakistanis, and restrictions on non-filers.

Key Reforms:

• Family Category: A new category will exempt dependents from filing tax returns if they are part of a family unit where the primary earner is already filing.
• Income Threshold: Individuals earning less than Rs600,000 per year will no longer be required to file tax returns.
• Overseas Pakistanis: Individuals residing abroad will be allowed to remain on the Active Taxpayers List without filing returns.
• Restrictions for Non-Filers: The FBR plans to impose restrictions on non-filers, including limitations on opening current accounts, making large transactions, and traveling abroad.

Addressing Concerns:

The FBR's reforms come in response to the growing number of nil-return filings, which have surpassed 2.5 million in the tax year 2023. These measures aim to differentiate between genuine filers and those who avoid filing to evade taxes.

Key Objectives:

• Simplify the Tax Filing Process: The reforms aim to make it easier for individuals to comply with tax regulations.
• Expand the Tax Base: By encouraging more individuals to file tax returns, the FBR hopes to broaden the tax base and increase revenue.
• Reduce Tax Evasion: The restrictions imposed on non-filers are intended to discourage individuals from avoiding their tax obligations.
• Protect Compliant Taxpayers: The reforms aim to ensure that compliant taxpayers are not unfairly penalized while non-filers are held accountable.

This article was published at FBR Introduces New Filing Category: Family Tax Returns