The Senate Standing Committee on Finance, chaired by Senator Saleem Mandviwalla, has approved a 75% withholding tax on telephone and internet services for non-filers, while a reduction in the tax rate for salaried workers is proposed.

The committee at its meeting approved the tax on telephone and internet services of non-filers. It, however, rejected the proposal to impose a 15% capital gains tax on real estate transactions from July 1 and share parliamentarians’ data with NADRA for tax collection.

Senator Anusha Rehman expressed concern over the security of NADRA’s data, while the FBR chairman stated that the Special Investment Facilitation Council (SIFC) had recommended sharing data with NADRA, including information on officers from Grade 17 to Grade 22. However, the committee rejected the proposal to share data of politicians with NADRA.

FBR Chairman Amjad Zubair Tiwana mentioned the introduction of a clause in the Finance Act for late filers in real estate transactions, suggesting a difference in tax rates between filers and non-filers.

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Senator Mandviwalla argued that the tax on late filers should be the same as that on non-filers. Anusha Rehman called for leniency towards petitioners and stricter taxes on non-filers. The committee postponed the proposal to hike property tax and rejected the proposal to extend tax exemptions for FATA and PATA for another year.

The FBR chairman emphasized that the government was against extension of the exemptions, noting that the IMF had also opposed tax exemptions for the merged districts. Mandviwalla stated that the entire industry of the country is affected by the privileges granted to FATA and PATA, which aggravates the industrial challenges.

The FBR chairman also pointed out the high withholding tax rate for non-filers and mentioned the possibility of de-linking their mobile SIM cards and business activities. He revealed that many of the 500,000 non-filers have an annual income of more than Rs2 million and have previously declared their income in tax returns. Amjad Zubair Tiwana emphasized that even those who file temporary returns to purchase a vehicle, plot or house will face additional taxes.

From next financial year, a sales tax of 18% will be levied on processed and packaged flour, pulses, rice, sugar and spices. The committee also discussed imposing an 18% sales tax on locally produced infant milk.

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During the meeting, industry representative Sheikh Waqar proposed a gradual increase in sales tax to avoid a sharp increase in infant milk prices. Noting that milk companies have been regularly increasing their prices in the last two years without contributing to government revenues, the FBR chairman stressed that even the distributors of multinational companies are not within the tax net. From next financial year, zero-rating will be completely abolished.

The committee also approved a proposal to ban foreign travel for non-petitioners. The FBR chairman indicated that action will be taken against those who do not file tax returns under the General Income Tax Order. However, exemptions will be granted for Hajj, Umrah, minor children, students and overseas Pakistanis who possess NICOP.

Non-filers will also have to deal with the disconnection of their mobile SIM cards, electricity and gas connections. Senator Farooq H. Naek explained that a travel ban on non-filers effectively means their names will be added to the Exit Control List.

The FBR chairman reiterated that non-filers will face high withholding tax rates and possible disconnection of their mobile SIM cards and business activities. The list of non-filers includes individuals with an annual income of more than Rs2 million who have previously declared their income in tax returns. Tiwana also said those who temporarily become filers to buy vehicles, plots or houses will face additional taxes.