Pakistan Budget 2024-25 Cracks Down on Tax Evaders Non Filers with Stricter Measures

Pakistan's recently proposed annual budget for FY2024-25 includes a series of harsher measures to penalize individuals and businesses who neglect to file their income tax returns. These stricter regulations aim to increase tax compliance and broaden the country's tax base.

Key Measures:

• Travel Ban for Non-Filers: The most significant proposal involves potentially barring non-filers from traveling abroad. This would be a significant step beyond existing measures that disable SIM cards and cut utility connections for non-compliant taxpayers.
• Digitalization and Progressive Taxation: The government emphasizes digitizing the economy and implementing a progressive tax system. This means individuals with higher incomes contribute a larger share of taxes.
• Restrictions with Exceptions: The proposed travel ban wouldn't apply to overseas Pakistanis (NICOP holders), minors, or students.
• Penalties for Non-Compliance by Authorities: The budget proposes a Rs. 100 million penalty for implementing agencies that fail to enforce the punitive measures against non-filers. This penalty increases for repeated offenses.
• Sealing Businesses of Non-Registered Traders: Businesses that haven't registered under initiatives like the "Tajir Dost Scheme" could face closure.
• Increased Advance Tax for Non-filer Businesses: The budget proposes raising advance tax on sales for non-filer distributors, dealers, wholesalers, and retailers.

Expected Impact:

These stricter measures aim to coerce non-filers into filing their tax returns, ultimately leading to a more documented economy and potentially increasing tax revenue generation. However, the effectiveness and potential economic consequences of these measures remain to be seen.

Pakistan's budget proposals for FY2024-25 signal a tougher stance on tax evasion. While the potential travel ban for non-filers grabs attention, other measures like increased advance tax and business closures for non-registration also aim to incentivize tax compliance. Whether these measures achieve their goals and strike a balance between encouraging tax filing and hindering economic activity remains to be determined.

This article was published at Pakistan Budget 2024-25 Cracks Down on Tax Evaders with Travel Bans, Business Closures