ISLAMABAD – The Federal Board of Revenue (FBR) has introduced a stringent measure, imposing a hefty 90% withholding tax on mobile phone top-ups for more than 570,000 non-filers.
New Tax Policy for Non-Filers
In a recent development, an Income Tax General Order (IGTO) has identified over 570,000 individuals who have not filed their income tax returns. These individuals will now face a staggering 90% withholding tax, a significant increase from the previous 2.5%, until they fulfill their tax obligations.
Automated Tax Deduction System
Under the new policy, an automated system will deduct the 90% tax from any top-up made by a non-filer, whether prepaid or postpaid. This means that only a fraction of the top-up amount will go towards the phone balance, with the majority diverted to the tax authority.
Collaboration with Telecom Companies
The initiative follows discussions between telecommunications companies and the FBR, where it was agreed to block SIM cards of non-filers. Additionally, there were hints of implementing a Plan B, involving an additional 2.5% withholding tax for active non-filer SIMs beyond May 15.
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Ensuring Compliance
The FBR’s move ensures that non-filers will face penalties regardless of SIM card blockage, as they will be taxed heavily on any balance top-ups using another SIM. Data identifying non-filers has been shared with the Pakistan Telecommunication Authority (PTA) and telecom companies. There is a looming deadline for telecom operators to block the SIMs of more than 570,000 non-filers.
Progress and Legal Challenges
Currently, over 11,500 SIM cards belonging to non-filers have been blocked, with warning messages sent to 15,000 defaulters regarding SIM deactivation. While three telecom companies have complied with FBR instructions and submitted their reports, one company has challenged the IGTO in court and has yet to block any non-filer SIMs.
Deadline and Legal Action
The FBR has issued a stern warning of legal action against telecom companies failing to meet the May 15 deadline for SIM blockage.
Identifying Tax Evaders
Earlier in May, the revenue agency identified over 2.4 million individuals who should be paying taxes but were not on record. From this pool, more than 0.5 million individuals were selected for SIM card deactivation, as they earned a taxable income but did not file their tax returns for 2023.
