Federal Govt Rules Out Mini Budget to Meet Annual Tax Collection Target
The federal government rules out mini budget to achieve its annual tax collection target, as announced during a parliamentary committee meeting. Instead, from October 1, strict measures will be enforced on non-filers, including restrictions on property purchases, vehicle ownership, and international travel.
Stricter Measures for Non-Filers: What to Expect
Starting from October 1, non-filers in Pakistan will face severe penalties and restrictions. This includes a ban on purchasing property, vehicles, international travel, opening current accounts, and investing in mutual funds. These measures are part of the FBR’s strict action plan to increase tax compliance in the country.
The chairman of the Senate Standing Committee on Finance, Senator Saleem Mandviwalla, emphasized the importance of these actions, stressing that non-filers significantly hinder the country’s progress toward its tax revenue goals. During the meeting, FBR officials highlighted their efforts to enforce stricter controls to ensure compliance among citizens.
Impact on the Economy and Tax Revenue | Federal Govt Rules Out Mini Budget
By targeting non-filers, the government aims to improve the overall tax base and, consequently, the revenue required to meet annual targets. This move is seen as a critical step in addressing the tax collection shortfall, especially as the FBR faces challenges in achieving its revenue goals without the introduction of a mini-budget.
However, this policy shift will affect a large section of the population, including those who have avoided filing taxes for various reasons. Non-filers will now be compelled to comply, or they will face restrictions that limit their participation in several key economic activities.
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Islamic Banking: Addressing Concerns About Compliance
During the Senate meeting, the committee received a briefing from the State Bank of Pakistan (SBP) on Islamic banking regulations. The focus was on how Islamic banking is governed under the Shariah Governance Framework (SGF) and whether it truly reflects Islamic principles. Members of the committee raised concerns about the apparent higher returns that Islamic banks are yielding, which may be one of the factors behind its rising popularity.
The committee requested a comparative report to understand how Islamic banking differs from conventional banking under the SBP’s guidelines. The chairman also pointed out the need to review the musharakh contract, particularly the absence of HIBA, which further complicates the adherence to Shariah principles.
Islamic Banking and Its Growth in Pakistan | Federal Govt Rules Out Mini Budget
Islamic banking continues to grow in Pakistan, and with proper regulatory oversight, it has the potential to revolutionize the financial sector. By aligning with Islamic principles, this sector has gained traction not only among Muslims but also among those looking for ethical alternatives to conventional banking.
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Government’s Focus on Financial Legislation
Several bills were also discussed during the Senate meeting, including amendments to the Banking Companies (Amendment) Bill, 2024 and The State Bank of Pakistan (Amendment) Bill, 2024. These legislative changes aim to strengthen the financial infrastructure in the country and provide more robust frameworks for banking practices.
The committee acknowledged that smaller provinces like Balochistan and Khyber Pakhtunkhwa are facing limited access to loans, which hinders industrialization. To address this disparity, the government is pushing for policy amendments to support these regions in their growth and development.
FBR’s Plan for Hiring Audit Firms | Federal Govt Rules Out Mini Budget
Another key focus during the meeting was the need for the FBR to hire professional audit firms. With the task of auditing 6 million taxpayers, the FBR lacks sufficient capacity. Therefore, they are looking to hire ACCA and CA professionals to streamline the audit process and improve efficiency.
The FBR has previously outsourced the audit function, following similar practices in 2005. However, the committee emphasized the need for transparency in hiring reputable audit firms to ensure fairness in the auditing process. The effectiveness of the audits is crucial for expanding the tax base, especially as non-filers come under increased scrutiny.
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