The Federal Board of Revenue (FBR) is launching a Tax Crackdown aimed at millions of tax evaders, proposing severe measures such as freezing bank accounts, prohibiting property and vehicle purchases, and cutting off electricity and gas connections. This Tax Crackdown comes in response to a significant tax shortfall of $7 billion in the first quarter (July-September) under the IMF’s Extended Fund Facility (EFF), following the FBR’s failure to bring 3.2 million retailers into the tax net.
Sources confirm that the FBR has identified two million “nil filers” out of six million return filers. To address this issue, the FBR has recommended categorizing non-filers into three groups and imposing fines of up to Rs 1 million for incorrect or incomplete tax returns. These measures require a mini-budget approved by parliament, necessitating a money bill or an ordinance to grant enhanced powers to tax authorities.
Under the proposed Tax Crackdown, “nil filers” will face immediate consequences, including account freezes and bans on purchasing properties or vehicles. Those evading taxes between Rs 0.5 million and Rs1 million may also see their electricity and gas services disconnected. The FBR previously attempted to disconnect mobile services for 0.5 million non-filers, but it did not yield the expected results.
Additionally, if tax dodgers are under-reporting income by Rs 1 million or more, the FBR plans to implement further punitive measures. The Tax Crackdown aims to introduce policy changes for those submitting inaccurate tax returns, affecting both Tier 1 retailers and manufacturers and covering Sales and Income Tax. For improved transparency, the FBR suggests involving third-party monitoring and employing artificial intelligence to facilitate comprehensive audits.
Also Read: FBR Sets New Property Valuation Rates for 42 Cities
An internal assessment indicates that the FBR is facing a tax shortfall of over Rs 220 billion for the first quarter against an ambitious target of Rs 2,652 billion. The annual tax collection goal is set at Rs 12,970 billion, in alignment with parliamentary approval and IMF agreements for the current fiscal year.
Also Read: FBR Shares Non-Filers List for SIM Blocking with PTA
In August 2024, the FBR experienced a Rs 98 billion shortfall, collecting Rs 1,456 billion against a target of Rs 1,554 billion. To meet the September target of Rs 1,196 billion and fulfill IMF obligations, the FBR is under pressure to enforce these stringent measures. The IMF may require additional tax actions through a mini-budget if the shortfall persists, emphasizing the need for this Tax Crackdown to hold accountable those refusing to pay taxes.
