According to reports, the government is poised to elevate the advance tax on immovable property purchases by non-filers in the forthcoming budget.
Reports revealed that discussions between the Federal Board of Revenue (FBR) and the International Monetary Fund (IMF) have centered on boosting the withholding tax on non-filers for property transactions.
The IMF’s presence in Pakistan coincides with negotiations for a new bailout package, as the country seeks a larger program to attain economic stability.
The government has pledged structural reforms and plans to deactivate mobile SIM cards of non-filers. However, the Islamabad High Court recently intervened, issuing a stay order on the government’s move until May 27.
Read:Â IMF Urges Pakistan to Raise General Sales Tax to 18%
The current tax regime imposes a three per cent levy on filers and a 10.5% tax on non-filers, generating nearly Rs80 billion in revenue this fiscal year.
The IMF has urged the FBR to further hike the advance tax rate for non-filers, proposing:
- 3% tax for filers and 6-7% for non-filers on properties valued up to Rs50 million
- 4% tax for filers and 12% for non-filers on properties priced between Rs50-100 million
- 5% tax for filers and 15% for non-filers on properties exceeding Rs100 million
If endorsed by Parliament, these adjustments could enable the FBR to collect over Rs100 billion in the next fiscal year, aiming to deter non-compliance and boost tax revenues from the real estate sector.
It’s of no use enhancing tax on filers who are already in the tax net. Increase it on non filers.