Islamabad: The Federal Board of Revenue (FBR), in a strategic bid to bolster revenue and broaden tax base, has taken a decisive step by announcing revised tax rates targeting non-active taxpayers, according to news published on July 27. FBR aims to encourage greater compliance and engagement from individuals who have so far remained outside the purview of taxation.
Following are the details of the changes made by FBR regarding tax deductions and rates as per the Finance Act 2023:
Cash Withdrawals: There will be no tax deduction on cash withdrawals below PKR 50,000 per day. For non-filers or those not on the Active Taxpayers List (ATL), the bank will deduct PKR 303 on cash withdrawals of PKR 50,500 per day, and the deduction will increase with higher withdrawal amounts. Exemption from tax deduction is available to federal and provincial governments, foreign diplomats, diplomatic missions, and individuals with a certificate of tax year income exemption.
Immovable Property: Withholding tax rates on the sale and purchase of immovable property have been increased from 2% to 3% for ATL persons and 6% for non-ATL persons. Similarly, the withholding agent will collect 3% or 7.5% tax on the fair market value from the purchaser on ATL or non-ATL, respectively.
Motor Vehicles: The fixed tax amount on motor vehicles with an engine capacity of 2001cc and above has been replaced with a tax rate of 6%, 8%, and 10% based on the engine capacity (for ATL persons). For non-ATL persons, the rates will be increased by 200%, i.e., 18%, 24%, and 30%.
Payments to Non-Resident Pakistanis: Withholding tax rates on payments to non-residents through a debit/credit card have been increased to 5% for ATL persons and 10% for non-ATL persons to discourage unnecessary foreign exchange outflow.
Domestic Aide Visa: A new section, 231C, has been introduced, where an advance tax of PKR 200,000 will be collected and deposited by any Pakistan authority issuing or renewing a domestic aide visa to a foreign domestic worker. This tax is adjustable against the tax liability assessed for a tax year.
As a graduate in English Literature, Zohaib believes that words are not just a mere figment of imagination. It takes wisdom to be good at them. Following this reason, he is pursuing his career as Public Relations and Content Specialist at Zameen.com.
Recent increase in property taxes when markets are already going through recession must be reconsidered. It has made the matters even worse for the entire community.
Recent increase in property taxes when markets are already going through recession must be reconsidered. It has made the matters even worse for the entire community.