Government suspends utilities and SIM cards for tax evaders as part of new budget measures

As Pakistan aims to increase its tax revenue in the 2024-25 budget, the chief of the Federal Board of Revenue (FBR) has announced that electricity and gas connections as well as SIM cards of taxpayers who do not file tax returns will be blocked.

In a recent development, the Senate Standing Committee on Finance and Revenue has approved the proposal to impose a foreign travel ban on taxpayers who fail to file tax returns. The decisions were taken during a meeting chaired by Saleem Mandviwalla.

FBR Chairman Zubair Tiwana informed the Senate committee that action under the Income Tax General Order (ITGO) could be expected against non-taxpayers, but exemptions would be granted for nationals performing Hajj or Umrah, children, students and holders of National Identity Card for Overseas Pakistanis (NICOP).

Those who fail to file tax returns face having their SIM cards, electricity and gas connections blocked and possibly having their businesses closed. A higher withholding tax rate has also been approved for tax evaders. The list includes 500,000 people with an annual income of over Rs 2 million.

Those who file a tax return only temporarily will also have to pay additional taxes on the purchase of vehicles, land and housing. The Senate committee has approved proposals to reduce the salary limit and increase tax rates, including a 75% withholding tax on cell phone and internet bills for tax evaders.

Earlier this week, Finance Minister Muhammad Aurangzeb stressed the need to widen the tax net, saying that the country cannot function with a tax rate of 9.5% of GDP. He stressed the importance of including everyone in the tax net and eliminating the category of non-taxpayers.

His statement came shortly after he presented the federal budget for the fiscal year 2024-25 to the National Assembly, which proposed a total expenditure of Rs 18.9 trillion.