KARACHI: The government has proposed a series of punitive measures in the annual budget for FY2024-25 to punish individuals and businesses who do not file income tax returns, including the possibility of being barred from foreign travel.

The measures appeared to be another attempt by the government to coerce non-filers into filing their tax returns for the documentation of the economy.

In his speech on the floor of the National Assembly on Wednesday, Finan­­ce Minister Muhammad Aurangzeb said the government aimed to increase the tax base and widen the tax-to-GDP ratio through these measures.

The measures are aimed at digitising the economy to implement progressive taxation regime where people pay taxes based on their income, he added.

The finance bill has proposed amendments to Section 114B of the Income Tax Ordinance, 2001 to stop non-filers from travelling abroad.

The sub clause 2 of the said section already empowered the FBR to disable SIMS and cut electricity and gas connections of non-filers.

“[A] citizen of Pakistan” who is liable to file tax returns but doesn’t do so can be stopped from travelling abroad if the proposal is passed by the parliament.

The restriction, however, doesn’t apply to holders of National Identity Card for Overseas Pakis­tanis, minors and students.

The implementing agencies will be slapped with a penalty of Rs100m if they defy the orders to take any of the three punitive actions. The penalty will go up by Rs200m for every subsequent defiance.

The businesses of traders and shopkeepers who fail to register under schemes such as Tajir Dost Scheme will be sealed, as per the proposal.

Any shopkeeper or trader who fails to register their business could be sentenced to six months imprisonment or fine, or both.

The advance tax on sales to distributors, dealers, and wholesalers who are non-filer has been proposed to go up from 0.2pc to 2pc and for non-filer retailers to 2.5pc from 1pc.

Published in Dawn, June 13th, 2024