The bank accounts of individuals who intentionally file income tax returns that are inaccurate or incomplete for the current year will be frozen by the Federal Board of Revenue (FBR).
In addition, the FBR has suggested outlawing the purchase of automobiles and real estate, cutting off utilities, and severely penalising taxpayers who submit inaccurate or deficient tax forms.
FBR Member Inland Revenue (Operations) has put up the policy steps to address tax non-compliance and bolster enforcement.
The goal of Member Inland Revenue (Operations)’s proposed policy adjustments is to reduce tax non-compliance, especially from individuals who file false or incomplete tax returns. These policies would encompass both sales tax and income tax, and they would be applicable to all parties, including Tier-1 merchants and manufacturers.
Read more: FBR blocked 210,000 SIM cards of users for not filing tax returns
To promote compliance and accurate return filing, FBR suggested the following punitive measures in addition to imposing a fine of Rs. 1,000,000 for each wrong or incomplete return filed:
- Utility disconnections will be applied to everyone who files inaccurate or missing tax returns.
- Freezing the bank accounts of everyone who files missing or inaccurate tax reports.
- Prohibition from purchasing any kind of real estate or automobile for anyone who files false or incomplete tax filings.
- Improved openness by using third parties to monitor all individuals filing incomplete or inaccurate forms
- An immediate and thorough audit of everyone filing inaccurate or incomplete forms was made possible with the use of AI and ML.
The FBR believed that completing these steps would be essential to strengthening our tax enforcement system and reaching our fiscal objectives. We would be happy to discuss these concepts further and would appreciate any suggestions on how to make them better in order to maximise their impact.
In Pakistan, non-filers face several significant consequences designed to encourage tax compliance. Here are some of the key penalties and restrictions:
- Higher Withholding Tax Rates:
Higher withholding tax rates apply to non-filers on a variety of financial transactions, including utility bills, bank withdrawals, and property sales.
- Financial Penalties:
Large fines and interest on overdue taxes may be imposed on non-filers.
- Restrictions on Property and Vehicle Purchases:
Those who do not file have restrictions on their ability to register cars and buy real estate.
- Limited Access to Financial Services:
Due to a lack of financial history evidence, non-filers may have difficulty obtaining loans, credit cards, or investment opportunities.
- Higher Taxes on Salaries and Profits:
Salary deductions are subject to additional taxes, while earnings from investments and prize bonds are subject to higher taxes.
- Restricted Access to Government Programs:
Certain perks and initiatives offered by the government may not be available to non-filers.
These measures aim to promote tax compliance and ensure that everyone contributes their fair share to the country’s revenue.