FBR to Abolish Non-Filer Status in Major Tax Reforms, Says Chairman FBR

Chairman of the Federal Board of Revenue (FBR), Rashid Mahmood Langrial, announced the government’s decision to completely abolish the concept of non-filers of income tax returns from the country’s tax laws. The move is part of a broader strategy to convert Pakistan’s cash-driven economy into a documented one and reduce the existing tax gap of Rs. 7.1 trillion.

During a detailed presentation to prominent business and trade groups at FBR Headquarters, Chairman Langrial emphasized the need to eliminate non-filing or nil-filing of tax returns. “Non-filers will not exist in our books, and there will be no concept of non-filers in the future,” he declared.

The FBR has invited representatives from key industries to participate in briefings on the planned transformation of the tax system. The meeting, attended by State Minister for Finance and Revenue Ali Pervez, along with senior FBR officials, saw Chairman Langrial and Member Inland Revenue (Policy) Dr. Hamid Ateeq Sarwar outline the proposed changes to the business community.

A key part of the reform is the abolition of the non-filer category. The government plans to remove the definitions of non-filers from the tax code and eventually eliminate the 10th schedule of the Income Tax Ordinance. Additionally, the FBR intends to ban the use of cheques for cash withdrawals beyond a specified threshold to further tighten the regulations on undocumented financial transactions.

Chairman Langrial stressed that these measures are essential to increase Pakistan’s tax-to-GDP ratio, warning that it will be impossible for the government to meet its tax collection goals without these reforms. He also highlighted the dangers of high tax rates driving businesses and skilled professionals out of the country, as seen in the textile industry and among the salaried class.

To enforce compliance, the FBR will introduce disincentives for non-filers, linking the ability to open bank accounts and make investments to the filing of tax returns. All monetary transactions will require documentation of their sources, backed by digital tools. Property transactions, in particular, will be categorized as eligible or ineligible based on tax compliance at the registrar’s office.

Langrial described non-filing as a form of domestic fraud and underscored the government’s commitment to ending it. “We must do away with the concept of non-filers,” he stated, assuring the business community that the FBR will use additional data to monitor and assess individuals’ financial activities.

These significant changes aim to close the tax gap and create a more transparent and fair tax system in Pakistan.