FBR Clarifies Whether New Law Will Result in More Taxes on General Public’s Electricity Use

Tax Laws (Third Amendment) Ordinance 2021 has not imposed any tax on electricity consumption by the general public, as only professionals would be required to pay additional advance tax under the new law.

This was stated by the newly appointed FBR Spokesperson, Asad Tahir Jappa, during an introductory meeting with the media at the FBR Headquarters on Wednesday.

He clarified that under the Tax Laws (Third Amendment) Ordinance 2021, the government had imposed an additional advance tax on the rates ranging from 5 percent to 35 percent on professionals using domestic electricity connections.

The professionals covered accountants, lawyers, doctors, dentists, health professionals, engineers, architects, IT professionals, tutors, trainers, and other persons engaged in the provision of services.

When asked about the filing of income tax returns, he replied that so far 0.75 million income tax returns have been received till September 21, and FBR is not considering any proposal to extend the date in the filing of income tax returns. He advised the taxpayers to timely file their income tax returns by September 30, 2021, to avoid penal action under the law.

When asked about the target of 4 million returns this year, he responded that the FBR had set a target of 3.5 million income returns for the current tax year.

FBR Spokesperson stated that the FBR is the top revenue collection agency of the country, but its public image and perception need to be improved, and due respect to the FBR needs to be given.

He quoted that three dozen officers lost their lives due to COVID.

Under the ongoing campaign of return filing, the FBR has approached 30 influential people for creating awareness among the general public. The messages by our opinion leaders/national heroes would plead the cases for building momentum of the ongoing campaign for filing of Income Tax Returns.

To a question on point of sale (POS), he stated that no new tax had been imposed on the POS retailers. However, there is an increase in the amount of penalty for tier-1 retailers who are not integrated with the Board’s computerized system.

Quoting data of Tax-to-GDP ratio available on the OECD website, Asad Tahir Jappa stated that the Tax-to-GDP ratio of Pakistan needs to be improved. France’s Tax-to-GDP ratio stood at 44.78 percent, Denmark’s stood at 44 percent, and UK’s Tax-to-GDP stood at 33 percent. Even the African countries have a Tax-to-GDP ratio of 16.5 percent. Within South Asia, he stated that Nepal is the leader in the region with Tax-to-GDP of 19.4 percent, followed by Bhutan at 16 percent. He informed that India and Sri Lanka have a Tax-to-GDP ratio of over 12 percent, Bangladesh stands at 9 percent, whereas Afghanistan has the lowest tax to GDP ratio in the region.

He added that the FBR is making serious efforts to raise its Tax-to-GDP ratio from the current level. The Tax-to-GDP ratio should be the benchmark for a certain segment of the business community, who are not ready to pay their due shares of taxes in the national kitty.

He added that during the last address of Finance Minister Shaukat Tarin to the senior officers at FBR Headquarters, Finance Minister shared his further vision and plan.