ISLAMABAD: Amid strenuous efforts of Prime Minister Shehbaz Sharif’s government to widen the tax net and increase revenue generation, Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial has revealed that the country is facing a gigantic tax gap of 7.1 trillion rupees.
Speaking at a press conference in Islamabad on Thursday, the FBR chief said the income tax gap stood at Rs2.4 trillion.
Highlighting the reforms in the tax sector, Langrial revealed that the tax administration has issued notices to 19,000 people, out of which 38,000 have submitted their tax returns amounting to Rs370.7 million.
“We are focusing on the richest five percent,” he said, while warning that action would be taken against those who did not file their tax returns.
Flanked by Federal Finance Minister Muhammad Aurangzeb, Minister of State for Finance and Revenue Ali Pervaiz Malik and Information Minister Attaullah Tarar, the FBR chairman highlighted reforms in the tax sector, saying the authority was digitalizing the invoicing process and digitally monitored the sugar industry. .
Meanwhile, speaking on the occasion, Finance Czar Aurangzeb said the government intends to increase the country’s tax to gross domestic product (GDP) ratio from 9-10 per cent to 13.5 per cent through the recently introduced Tax Laws (Amendment) Bill 2024.
“We must achieve this tax objective in three years,” he remarked while emphasizing the need to fight tax evasion and formalize the informal sector.
The federal minister further added that the existing potential for tax increase stood at Rs71 billion.
Further, highlighting the need to increase tax resources and control deficits, Minister of State Malik revealed that tax returns increased from three million to five million by the end of October .
Taxation Laws (Amendment) Bill, 2024
The presser comes days after Aurangzeb introduced the aforementioned legislation aimed at barring non-filers from purchasing cars above 800cc and opening bank accounts.
The bill, tabled in the National Assembly on December 18, proposes that non-filers will not be allowed to purchase property beyond a certain limit.
It is also expected that non-filers will not be able to purchase shares beyond a certain limit and will not be allowed to open a bank account.
Under the proposed legislation, non-filers will not be able to transact through a bank beyond a certain limit. They will, however, be allowed to purchase motorcycles, rickshaws and tractors.
Additionally, the bank accounts of unregistered entrepreneurs will be frozen and they will be prohibited from transferring assets. The amendment also proposed that the government be authorized to seal the properties and businesses of non-filers.
Besides, freezing of accounts of those in the FBR list has also been proposed.