FBR Considering Heavier Tax Rate for Non-Filing Salaried Individuals

Federal Board of Revenue is considering another method which will increase tax collection from those individuals who already submit their income taxes. The FBR is planning to charge higher tax rates from those salaried employees who do not file their income tax returns. As a note, salaried employees already have their taxes deducted at source.

Government Tries New Method to Enhance Tax Collection Rates

The government currently collects Rs 79.4 billion only from salaried individuals, but plans seem to suggest that it wants to penalize non-filers. Income tax of the salaried class is deducted at source, i.e. when they get their pay. It looks like filing income tax returns is a huge priority for the government.

Last year, the government imposed additional withholding tax on all banking transactions valued over Rs. 50,000 during this fiscal year. The same goes for non-filers who are looking to buy a new vehicle. They are charged an additional amount if they do not file their income tax returns.

FBR officials say that they are considering a higher tax rate for non-filers, considering them in the high income bracket for taxing purposes. The move is a part of FBR’s strategy to penalise who do not submit income taxes.

The change has to be approved by the Parliament before it can be implemented for the fiscal year 2016/17. If this happens, this would be the first time that salaried individuals will be charged higher tax rates. However, sources say that FBR might exclude some low income tiers from the measure.

Data on Salaried Individuals, Income Tax and Withholding Tax

The government and the private sector deduct income taxes directly from the monthly wage if the annual salary is over 400,000. There are about 1.37 million salaried individuals who are paid over the aforementioned amount. Out of those, only 309,000 file income tax returns, say sources from the FBR.

Withholding tax is used to collect the largest share of tax from the public. During the last fiscal year, the government was able to collect Rs 691 billion (68.8% of total tax) in withholding taxes out of the total Rs 1.006 trillion received in taxes. FBR officials say that people and companies tend to understate their income and sales to reduce their taxable amount.

Officials have stated that sectors, which did not previously contribute significantly to the exchequer, will be taxed more heavily during the next budget. Currently, the highest amount of taxes are received from commercial banks, power companies and telecom companies.

It is hard to understand how the government can expect the general public to pay taxes when government officials and politicians themselves avoid taxes by laundering money to offshore companies.

If the considerations are an indication, the government plans to increase the tax burden on the public especially those salaried individuals, who are already bearing the brunt when it comes to income tax. It won’t be wrong to say the government is about to use salaried individuals and the common man as scapegoats to increase tax returns prior to the huge amount of loan payments the government has to pay back to local and international financial institutions by the end of 2016.

He is the Editor-in-Chief at ProPakistani. Reach out at aadil.s[at]propakistani.pk

  • Behtreen!
    Loot lo aur mar do awaam ko lekn khud arboun rupay bahar accounts main rakh lo.

  • these m***ch**** can only tax the salaried persons IA the day will come when everyone will either suicide or leave the country and they will be governing only the corrupt and elite … establishment of the pakistan consist of the most shameless people in the world they all are corrupt financially, morally, ethically and yet they approve bills to govern the life of common simple man who is working hard to earn livelihood and trying hard to make its both end meet ,in civilized society they all would be not only behind the bars but also having lashes on their asses daily shameless pathetic people fbr is corrupt organization how can it approve this, these things can only work in eighth wonder of world pakistan

  • How can any rational person support PML-N? If you are a PML-N supporter and you are reading this, I am not blaming you or anything but just take a moment to think about your choice. We are all Pakistanis and we want betterment for our country. Squeeze the middle class, keep getting more loans, play blame games and disregard democratic traditions? Is this what you want for your future generations?

    • anyone will little bit of brain will not agree with noora but sadly in our country word sherrr gathers too much support among the masses.

      • most supports are either illiterates or “parha likha jahil”
        no offense Sher k ladlo…

  • pls mr dar enlighten us about tax heavens like panama. so that we could also invade taxes like u.

  • This will only effect people whose salary is over PKR 33000/- per month who DO NOT FILE INCOME TAX RETURNS. Just file your income tax returns, it’s a free service, other than the fee you pay your accountant to do the actual filing (my accountant charges me PKR 2500 per year).

    • Why should I pay tax or file when the lawmakers themselves, as well as bureaucrats & businessmen all avoid paying taxes or transfer funds to tax havens?

    • those 33000/- salaried persons are also human. And you are paying 2500/- for a Free service makes no sense but only the feel that it is not understandable for common people even I am having MBA degree and computer worm but their online form system is lot more complex for general public.. they should make it easier and also their is No logic to put Extra tax for salaries person who have Only source of income and paying tax out of it…whereas people having business in Millions avoid tax by hiring lawyers/ accountants and they are not going to hunt for them.. instead they are killing already killed…. :/

  • This is plain stupid. Salaried class are taxed at source so how come their tax return filling can increase tax collection?

    • It is mandatory to file Wealth Statement with Tax Return, which isthe Govt target to increase Tax Collection!!!

  • First make return filing easy…. i spent 3 days and at the end.. just gave a shut up call…what else other source of income do we have to pay extra tax while already paying tax from salaries… WTH

  • ya Allah! tu in zalimo se hmn nijaat dila de or hmn zulm k khilaf munazzam kar dey infradi tor pr b or ijtamai tor pr b. ameen.

  • higher rate should be imposed on business community who just dont pay taxes…….salaried individual are being deducted at source for the taxes already

  • I say fk this Gov, their so called taxes.
    They earn in billions and pay penny
    We earn in cents and survive barely

  • First you use a word which you are afraid to write full expecting it to get censored and then in the same line you add “inshAllah”. With this kind of nation, we will always get these kind of leaders. So forget about taxes and other things, first try to fix ourselves. I aint a supporter of anyone of these politicians so dont label me noora etc.

  • This is their sick mentality, matlab apni billions ki haram kamai per 1 paisa tax nai dena, or public se billions tax batorna ha. Wah! Akhir kitna haram khaei ge ye politicians, jana to 2 gar zameen me ha. Ager Qabar me bhi le ker jate hain ye itna paisa, to qabar bhi choti per jae ga, maqbara banwana parey ga paisey rakhney k lie.

    Mujhe bass aik baat ka sukoon hai, Beshak Allah behtreen Insaaf karney wala hai.

  • reading this news again. nation needs a representation, in all matters of life, from themselves. I know it’s not possible to get all people on board but there’re some crazy ones who’re the only hope, if they somehow get together and start the resistance (first through judiciary system), this system will start shaking and, In shaa Allah, will come collapsing down for good.

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