Government Increases Tax Burden for Non-Filers

May 30, 2024Zayn0

With a particular focus on those who do not submit income tax returns, the impending Finance Bill 2024 is expected to bring about substantial changes to the tax system. The Federal Board of Revenue (FBR) is the government agency tasked with expanding the tax base and raising the cost of financial transactions for taxpayers who have not been paying their fair share of taxes.

An increase in withholding tax on bank transactions 

A significant suggestion in the Finance Bill 2024 is raising the withholding tax rates on cash withdrawals made by non-filers from banks. The FBR has suggested raising the withholding tax rate on these kinds of transactions from the current 0.6 per cent to 0.9 per cent.

Goal Of The Policy

The goal of this policy is to incentivize non-filers to join the official tax system and deter them from conducting cash-based transactions.

Expensive Goods for Unregistered Individuals 

Regarding sales tax, the FBR has also suggested raising the cost of supply to unregistered individuals for the business community. This action is a component of the government’s plan to encourage companies to cooperate with registered taxpayers and support the broader goal of collecting taxes.

Higher Withholding Taxes for a Range of Transactions 

The Finance Bill 2024 will also raise withholding taxes on various kinds of transactions involving non-filers in addition to changing sales tax and cash withdrawal policies. This covers withholding taxes on contracts, services, and supplies, among other things. The objective is to incentivize businesses and individuals to comply with the law and establish a more equal tax system.

Punishing Non-compliance 

The government’s intention to punish individuals who have not been paying their taxes is evident in the proposed tax measures. The government intends to encourage non-filers to join the formal tax system and make a fair contribution to the nation’s economic growth by raising the cost of financial transactions for them.

In Summary 

The way the government collects taxes has changed significantly with the passage of the Finance Bill 2024. The goal of the FBR is to increase the tax base and build a more inclusive and equitable tax system by focusing on non-filers and increasing the cost of their financial activities. Stakeholders are expected to closely monitor these actions in the upcoming months, as they are anticipated to have significant effects on people and businesses nationwide.

Zayn

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