In a robust action against non-filers amid the prevailing financial crisis being faced by the cash-strapped country, the government on Tuesday directed the Pakistan Telecommunication Authority (PTA) and the telecom companies to block mobile phone SIMs of over 500,000 non-filers.

In a statement, the Federal Board of Revenue (FBR) said: “In exercise of the powers conferred under section 114B of the Income Tax Ordinance, 2001, the FBR is pleased to issue this Income Tax General Order (ITGO) to disable the mobile phone SIMs in respect of following persons who are not appearing on active taxpayer list but are liable to file the Income Tax Return for Tax Year 2023 under the provisions of the Income Tax Ordinance, 2001.

The development came a day after Prime Minister Shehbaz Sharif hinted at undertaking “massive economic reforms” at the special meeting of the World Economic Forum (WEF) in Riyadh, Saudi Arabia.

Speaking at the closing plenary of a special meeting of the WEF, the premier vowed to introduce deep-rooted reforms and adopt meaningful austerity to steer the country out of the economic crisis.

The FBR asked the PTA and all telecom operators to ensure compliance with the Income Tax General Order (ITGO) with immediate effect.

“The mobile SIMs in respect of the above-mentioned individuals will remain blocked until restored by FBR or the Commissioner Inland Revenue having jurisdiction of the person.”

The tax collection body further said: “The compliance report in this regard is to be furnished to the FBR on May 15.”

The FBR made public the names of 506,671 non-filers and said that these individuals were not filing income tax returns despite having taxable income.

The mobile SIMs of these individuals could be blocked at any time, the FBR added. These individuals are not included in the list of active taxpayers, read the statement.

The top tax collection body further said that the “strategic step” shows its commitment to tax compliance among taxpayers. The objective behind the move is to strengthen the tax base with the support of concerned state holders, the FBR added.

“The FBR is committed to promoting a just, fair and uniform tax system in the country.”

It further said that the non-filers could get their mobile phone SIMs restored by filing their tax return for the year 2023.

It is pertinent to mention here that the tax collection body, last year, secured additional powers in a bid to increase the tax net and was authorised, under Section 114B in the Income Tax Ordinance 2001, to disconnect utility connections and block mobile SIMs if a return is not filed in response to notices issued to them.

In November 2023, as many as 145 district tax offices across the country were established as part of restructuring measures to bring 1.5 to 2 million new taxpayers into the tax net till June 2024.

Furthermore, the FBR has also held consultations with the PTA to identify SIMs of under-filers who failed to file their returns despite possessing taxable and duly being notified by the body who was in possession of their transaction records.

“We have finalised details of this stringent action against alleged tax evaders and their SIMs of mobile phones would be blocked by April 2024,” one top official had told The News earlier this month.

Sources said although the FBR had identified two million potential tax dodgers, it was decided that out of them only 0.5 million SIMs would be blocked in the first phase due to the concerns raised by telecom companies over the feasibility of blocking SIMs in such large numbers.

It is pertinent to know that the FBR received total income tax returns of 5.9 million in the tax year 2022, but it dropped to 4.2 million in the tax year 2023 till March 2024 in line with the Active Taxpayers List (ATL) as around 1.8 million did not file their returns.

Last month, the government in its bid to broaden the tax base, commenced the registration of traders for its Tajir Dost Scheme in its bid to rope in five major categories of traders into the tax net.

Titled “Tajir Dost Scheme”, the move will focus on wholesalers, dealers, retailers, furniture and decoration showrooms, jewellers, cosmetics stores, grocery, medical and hardware stores, meat shops, vegetables and fruits outlets, motor vehicle showrooms, fertiliser, pesticide and chemical dealers in Karachi, Lahore, Peshawar, Quetta Islamabad and Rawalpindi.

The scheme which kicked off earlier this month will see the tax collection set to come into effect from July 1. Traders who fail to register by the April 30 deadline, will face monetary penalties under section 182 of the Income Tax Ordinance 2001.