The finance minister stated in his budget speech that the government planned to introduce a simplified tax filing system, especially for the salaried class and small businesses. However, based on my experience, tax filing is a complex legal obligation, and it cannot be attempted without the help of a professional taxation lawyer.
Under the existing law, once a return is filed, taxpayers are legally obligated to disclose all financial information for all subsequent years; or, else, they are served with legal notices. This is not informed in advance to new filers.
The government seems intent on incentivising filing among low- and middle-income individuals who do not fully understand taxation. The way to do it is to provide them with some sort of tax relief against non-filers.
The new budget’s penalties for non-filers highlight a concerning trend: targeting low- and middle-income individuals, and first or single home and car owners, while failing to address tax avoidance by those already holding substantial wealth.
The government should stop encouraging filings for low- and middle-income individuals. Instead, the government should prioritise higher withholding taxes based on income, regardless of one’s filing status. This would ensure fair tax collection and protect the vulnerable citizens from any potentially disastrous outcome.
KARACHI
