If you are a non-filer and celebrating the news that the government has allowed you to purchase vehicles with an engine capacity up to 1300cc, here is something that might spoil your mood. You will now pay more than double in taxes compared to those who have filed their tax returns.
In Wednesday’s supplementary budget, the government has penalised non-filers by increasing the tax rate and benefitted those who have filed their tax returns.
To put it plainly, this means you will now pay Rs60,000 in tax on a 1300cc car, like a Honda City or Suzuki Swift, as opposed to the Rs40,000 you were paying under the previous tax policy. This is more than double the amount (Rs25,000) filers pay for the same car.
|Engine capacity||Tax on filers (Rs)||Tax on non-filers (Rs)|
Similarly, non-filers will pay Rs37,500 on 1000cc car, such as Wagon R, up from Rs25,000 before the budget was announced. Filers will continue to pay the old amount, which is Rs15,000 on a 1000cc car.
Previously, non-filers were not allowed to buy new cars. On Wednesday, the government removed this restriction, allowing them to buy vehicles with an engine capacity up to 1300cc. However, this relaxation comes with a price for non-filers. The government has also increased duties on imported luxury cars — those above 1800cc engine capacity — by up to 25%.
The government is doing this because it wants to bring more people under the tax net to increase its revenue. The government is facing a budget deficit (loss) of more than Rs2 trillion a year because it spends more than it earns. Taxes are the main sources of government revenue but because of massive tax evasion, the government is unable to increase its income. Pakistan has one of the lowest tax-to-GDP ratios (12%) in the region and only 1.4 million people file their income tax returns.