ISLAMABAD: The Federal Board of Revenue (FBR) has notified revised tax rates for non-active taxpayers to increase collection from those who are not willing to be part of tax rolls.

The FBR has announced that there will be no tax deduction on cash withdrawals below Rs50,000 per day. In the last budget, the government introduced a 0.6 per cent tax deduction on cash withdrawals from non-filers, or not on the Active Taxpayers List (ATL), according to an income tax circular no 02, 2023 issued on Wednesday.

However, for those who do not exist on the ATL, the bank will deduct Rs303 on cash withdrawals of Rs50,500 per day. The value of tax deduction increases with a rise in cash withdrawals — Rs330 on Rs55,000 and Rs450 on Rs75,000, respectively.

The exemption from tax deduction will be available to the federal and provincial governments, a foreign diplomat or a diplomatic mission in Pakistan, or a person who produces a certificate from the commissioner that their income during the tax year is exempt.

Through Finance Act 2023, this fixed amount of tax on motor vehicles having an engine capacity of 2001cc and above has been replaced with the collection of tax at the rate of 6pc, 8pc, and 10pc of the value of the motor vehicle having an engine capacity of 2001cc to 2500cc, 2501cc to 3000cc, and above 3000cc, respectively. These rates will apply to persons on ATL.

In the case of non-ATL persons, the rates will be increased by two hundred per cent — 18pc, 24pc and 30pc, respectively.

There will be a different rate for motor vehicles if the engine capacity is not applicable and the value of the vehicle is Rs5 million or more. In this case, the rate of tax collectable will be 3pc of the import value as increased by customs duty, sales tax and federal excise duty in case of imported vehicles or invoice value in case of locally manufactured or assembled vehicles.

Through Finance Act 2023, the withholding tax rates on the sale and purchase of immovable property have been increased from 2pc to 3pc. Now any person responsible for registering, recording or attesting transfer of any immovable property at the time of registering, recording or attesting the transfer will collect 3pc or 6pc tax of the gross amount received from the seller on ATL or non-ATL respectively.

Similarly, the withholding agent will collect 3pc or 7.5pc tax of the fair market value from the purchaser on ATL or non-ATL, respectively.

To discourage unnecessary outflow of foreign exchange reserves, withholding tax rates on payment to non-residents through a debit/credit card have been increased from 1pc to 5pc for ATL persons and from 2pc to 10pc for non-ATL persons. These payments to non-resident persons have a substantial impact on foreign exchange outflow from the country.

Finance Act 2023 has introduced a new section 231C whereby advance tax of Rs200,000 will be collected and deposited by any Pakistan authority issuing or renewing domestic aide visa to such foreign domestic worker. Such authority will collect this advance tax from the employer or sponsor or agency, as the case may be, at the time of issuance or renewal of domestic aide visa. This is an adjustable tax and the person from whom this tax has been collected can adjust this advance tax against tax liability assessed for a tax year.

Published in Dawn, July 27th, 2023