Advance tax on cash withdrawals for non-filers suggested to increase to 1%

The action is one of the efforts being made by the government in order to broaden the tax

ISLAMABAD: The federal government has suggested a rise in the rate of advance tax paid on cash withdrawals by non-filers from the existing 0.6% to 1%. Finance Minister Muhammad Aurangzeb made this suggestion while presenting the budget speech in the National Assembly.

The action is one of the efforts being made by the government in order to broaden the tax net and get more people to file their income tax returns.

New Income Tax Classification System

The Finance Minister also indicated that a new classification system for income tax is being implemented. This new classification will do away with the existing differentiation between “filers” and “non-filers.”

Only those who file both their income tax returns and wealth statements will be permitted to make significant financial transactions under the new regulations.

Restrictions on Non-Filers

It has been made clear by Muhammad Aurangzeb that only filers of tax returns will be permitted to buy motor vehicles and property. Furthermore, only filers who meet their tax obligations will be permitted to invest in securities, mutual funds, and open certain types of bank accounts.

The government expects these actions to make the tax system stronger and documentation in the economy better by inducing more individuals to join the tax network formally.