FBR warns of action against 'under-filers' as deadline looms

**ISLAMABAD:** The Federal Board of Revenue (FBR) Chairman, Rashid Mehmood Langrial, warned that individuals who under-file their taxes will face serious consequences, including restrictions on significant financial transactions. Speaking on Geo News' program "Aaj Shahzeb Khanzada Kay Sath" on Thursday night, he stated, "Those making substantial transactions will not be able to purchase property, vehicles, or operate bank accounts."

Langrial emphasized that the final deadline for tax return submissions is October 14, after which the government will move to eliminate the category of non-filers. He noted that while ordinary citizens could still buy plots and used vehicles, those involved in larger transactions would be prohibited from making such purchases.

He mentioned that while some countries impose various bans, the Pakistani government is considering restrictions on specific activities, such as purchasing plots exceeding Rs10 million, buying new vehicles, and freezing bank accounts. A potential ban on air travel for non-filers may also be introduced.

Under-filing remains a significant challenge within Pakistan's tax system, prompting the government to enhance the audit capabilities of its tax machinery. Langrial highlighted that there are three million individuals required to pay taxes, with four million households possessing air conditioners. He remarked that a narrative exists claiming that only 2% of the population pays taxes, attributing this to widespread poverty and a smaller pool of eligible taxpayers.

Langrial noted that many people engage in under-filing, failing to fully meet their tax obligations. He cited discrepancies found during an FBR analysis, where one company paid only 7% tax while another in the same sector paid 21%, indicating potential tax evasion.

Using the cement sector as an example, he explained how discrepancies in coal pricing between companies raised suspicions of underreporting sales. He stated, "The company showing coal at Rs5,000 per ton is likely suppressing its sales," reflecting a broader issue of dishonesty within the society.

The FBR's analysis of the textile sector revealed numerous inconsistencies, indicating significant tax evasion. Similarly, in the beverage sector, discrepancies in sugar input claims raised further concerns about the authenticity of the data being reported.

Langrial characterized sharing false data as a criminal act, akin to robbery, and asserted that there is no entitlement to tax amnesty. He also addressed the low salaries of field officers, requesting the prime minister ensure their mobility, as they earn only Rs111,000 per month.

Additionally, he acknowledged that smuggling poses a significant problem. Langrial noted that the FBR's reform plan has received in-principle approval, but changes will require time, as procedural and legislative reforms cannot be implemented overnight.

He expressed optimism that Pakistan's FBR tax-to-GDP ratio could reach 15% when accounting for petroleum levies, while provincial contributions could potentially increase taxation by an additional 3% of GDP, allowing the country to aim for an overall 18% target.