Debt-ridden Pakistan is about to face a PKR 6,552,700,000,000 bomb in a few months
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Lifeline or liability? $12 billion in temporary deposits
$5 billion from Saudi Arabia
$4 billion from China
$2 billion from the UAE
$1 billion from Qatar
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$11 billion still to pay regardless
$1.7 billion in international bond repayments
$2.3 billion in commercial loan payments
$2.8 billion to multilateral creditors including the World Bank, Asian Development Bank, Islamic Development Bank, and Asian Infrastructure Investment Bank
$1.8 billion in bilateral loan repayments
Debt now consumes nearly half of federal budget
Military spending continues despite fiscal strain
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A crisis years in the making
Pakistan has kicked off its new fiscal year with a massive repayment bill of over $23 billion in external debt, The News reported, citing the Pakistan Economic Survey 2024–25. The government must settle these payments during 2025–26, and failure to do so could place the country on the edge of default.By the end of March 2025, the country's total public debt stood at Rs 76.01 trillion. That includes Rs 51.52 trillion in domestic borrowing (roughly $180 billion) and Rs 24.49 trillion (around $87.4 billion) in external loans. The external debt is made up of two parts: money borrowed by the government and funds drawn from the International Monetary Fund (IMF).This debt has built up over years of economic mismanagement, stop-gap funding, and repeated bailouts. But this year's repayment demand has exposed just how little room the government has left to manoeuvre.Of the $23 billion Pakistan must repay this year, $12 billion comes in the form of temporary deposits from four so-called friendly nations, as reported by PTI. These are:These funds are not permanent and are only useful if rolled over. If any of these countries decide to pull out, Pakistan will be forced to pay them back in full this year.The News cautioned, 'The situation can worsen if friendly countries refuse to grant rollovers on their deposits, which would make it compulsory for the government to make payments.'This leaves the government heavily dependent on diplomatic goodwill, not financial strength. And there are signs that even goodwill is wearing thin.Even if all the temporary deposits are extended, Pakistan must still cough up around $11 billion in repayments to external creditors this year, as reported by PTI. This includes:This pressure comes at a time when Pakistan's foreign reserves are already under stress. The country has limited sources of fresh income and is still waiting for a new extended programme from the IMF.Pakistan has earmarked Rs 8.2 trillion for domestic and external debt servicing in its 2025–26 budget. That figure makes up 46.7 per cent of the total federal budget of Rs 17.573 trillion.Put simply, nearly half the money Islamabad plans to spend this year is going towards repaying old loans.There is now less left for development, public services, or even basic maintenance of existing infrastructure. Education, health, and social welfare continue to take a backseat while interest payments dominate national spending.Despite this bleak financial outlook, Pakistan's defence expenditure has not slowed. While seeking bailouts and rollovers, the government has pressed ahead with large arms deals.It has finalised a strategic partnership with Turkey, which includes a $900 million drone deal and more than 700 loitering munitions. The partnership also covers intelligence sharing and broader security cooperation.The alliance has been described as one meant to 'do jihad against India' by military sources cited in reports. There are also ambitious trade goals of $5 billion tied into the arrangement.Additionally, Pakistan is reportedly acquiring 40 J-35A stealth fighter jets from China, supposedly at a discounted rate.These deals reflect the enduring priority given to military parity, particularly with India, even as the country's own economy remains fragile.Pakistan's current position is the result of decades of reckless borrowing, lack of fiscal discipline, and a powerful military establishment unwilling to scale back.The military, which has long seen itself as the guardian of national stability, has also been a major recipient of foreign aid and loans. Much of that money, critics say, has gone not into productive assets or economic upliftment but into defence and patronage.The result is a hollow economy, propped up by emergency funding, foreign deposits, and repeated IMF interventions.While Pakistan hopes for another round of diplomatic backing, there's no guarantee this time. Saudi Arabia has already begun demanding more reform and transparency before offering further help. China, facing its own economic headwinds, is also proceeding more cautiously.If even one major depositor refuses to roll over its funds, Islamabad will have no choice but to pay. And with limited reserves and few avenues for quick capital, that could lead to further economic distress or forced austerity.For now, Pakistan is racing the clock. The first repayments are due in a matter of months. And there's little sign of a long-term fix in sight.(With inputs from PTI, IMF)
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Economic Times
17 minutes ago
- Economic Times
Taxpayer wins Rs 1.4 lakh penalty case despite claiming false income tax deductions to reduce income by 50%; Know the details
ET Online ITAT: Penalty of Rs 1.4 lakh deleted despite a taxpayer claiming false income tax deductions to reduce his income by 50%; Know the details The Income Tax Department imposed a penalty equivalent to 17% of Mr Shinde's salary after it was proved that he had claimed false income tax deductions to under-report his income by about 50% to lower his net income tax liability. The penalty imposed by the income tax department amounted to Rs 1.4 lakh. Shinde's actual salary was Rs 8 lakh a year, which he reported as only Rs 4 lakh. Although this might look like a fair punishment for someone who wilfully evaded paying income tax, Mr Shinde argued in court that he was just an innocent employee with a technical background. He said that like him, many other employees from companies like Ceat, Bosch, HAL, Mahindra and Mahindra among others, relied on a tax consultant named Mr Patil to file their Income Tax Returns (ITRs). Patil assured them that he was an expert in tax law and could legally calculate a lower tax, leading to a refund of the TDS deducted by their employer. Shinde's lawyers told ITAT Pune: 'The assessee was unaware about the contents of the Income Tax Return (ITR) filed by Patil & truly believed that the returns are filed legally as per the provisions of the Income Tax Act.' Shinde also informed the court that as soon as he found out about this illegal act of claiming false tax deductions, he had filed a complaint in the Economic Offence Wing, Maharashtra Police against Patil. Moreover, Shinde also paid the full tax amount plus interest, just like he was supposed to, without claiming any bogus tax deductions. However, the income tax department stated that even though he returned the owed tax with interest, he should still face penalty for committing this offence and for not voluntarily submitting a revised first, Shinde filed an appeal against the penalty of Rs 1.4 lakh that the tax department slapped on him with the Commissioner of Appeals (CIT (Appeals)). However, CIT (Appeals) rejected the appeal, leading Shinde to take his case to ITAT Pune. There, he won the case and the entire penalty of Rs 1.4 lakh was cancelled. The main reason why Shinde won this case is because ITAT Pune recognized his good behavior. Shinde, pointed out the illegal actions of his tax consultant (Patil) and also returned the full amount of the income tax owed, along with interest, just as the law required. ITAT Pune said: '....It is found that when the notice under Section 148 was issued, the appellant (Shinde) has disclosed his correct income & paid the due tax before issue of notice. We also find that the Assessing Officer of Income Tax Department has accepted the return (ITR) as it is which was furnished by the appellant (Shinde) in response to the notice u/s 148. We cannot accept the contention of Ld. DR (income tax department lawyer) that the revised return (revised ITR) was not voluntary, therefore the penalty u/s 270(A) of the Act is inevitable….'Check out the info below to find out why and under what circumstances Shinde managed to win this income tax penalty case despite claiming false tax deductions to declare lower income and pay less tax. How did this income tax penalty case for claiming false tax deductions start? According to ITAT Pune judgement dated May 8, 2025. Here's the timeline of events: FY 2017-18: Patil filed Shinde's ITR declaring taxable income of Rs 4 lakh (407,090) by claiming multiple income tax deductions. Patil filed Shinde's ITR declaring taxable income of Rs 4 lakh (407,090) by claiming multiple income tax deductions. May 28, 2019: Shinde came to know that Patil claimed excess tax refund by claiming many false tax deductions. He immediately paid back the due tax with interest. However, the revised ITR could not be filed voluntarily since the date to file one was over. Shinde came to know that Patil claimed excess tax refund by claiming many false tax deductions. He immediately paid back the due tax with interest. However, the revised ITR could not be filed voluntarily since the date to file one was over. February 2020: The Income Tax Department Assessing Officer (AO), on the basis of information received from the Income Tax Officer, (Investigation), that Shinde has claimed excess deductions, initiated proceeding under Section 147 after obtaining approval from the authorities and accordingly, a notice under Section 148 was issued. The Income Tax Department Assessing Officer (AO), on the basis of information received from the Income Tax Officer, (Investigation), that Shinde has claimed excess deductions, initiated proceeding under Section 147 after obtaining approval from the authorities and accordingly, a notice under Section 148 was issued. March 11, 2020: Shinde filed an ITR in response to notice under Section 148, declaring taxable income of Rs 8 lakh (8,32,990). Shinde filed an ITR in response to notice under Section 148, declaring taxable income of Rs 8 lakh (8,32,990). March 2, 2021: The Income Tax Department completed the assessment of Shinde's ITR under Section 147 by accepting it. The Income Tax Department completed the assessment of Shinde's ITR under Section 147 by accepting it. September 12, 2021: The Income Tax Department Assessing Officer (AO) imposed a penalty of Rs 1.4 lakh (1,46,760) under Section 270A(8) for under-reporting of income in consequence of misreporting. Shinde filed an appeal in CIT (A) against this penalty order. The Income Tax Department Assessing Officer (AO) imposed a penalty of Rs 1.4 lakh (1,46,760) under Section 270A(8) for under-reporting of income in consequence of misreporting. Shinde filed an appeal in CIT (A) against this penalty order. September 27, 2024: CIT (Appeals) dismissed Shinde's appeal and confirmed the penalty of Rs 1.4 lakh (1,46,760) imposed u/s 270A(8). It is this order of CIT (Appeals) against which Shinde filed an appeal before ITAT (Pune). Also read: Income Tax Bill 2025: Income from house property taxation related two key amendments suggested by select committee, know the impact ITAT Pune's investigation found that Shinde was cheated by Patil to conduct this tax fraud According to the judgement order, here's what ITAT Pune said:(No part of the judgement is altered and the same is presented below as it is) 'We find that the assessee (Shinde) is a salaried employee & belongs to a technical background. The return (ITR) of most of the employees of CEAT LTD, Bosch Company, HAL & M & M including that of the assessee (Shinde) was filed by a tax consultant namely Patil. We further find that the assessee (Shinde) came to know from other employees in the company that Patil with his expertise is able to legally calculate lower tax, resulting in a refund of TDS deducted by the employer. The assessee (Shinde) was unaware about the contents of the Income Tax Return filed by Patil & truly believed that the returns (ITR) are filed legally as per the provisions of the Income Tax Act. The assessee being from technical background does not understand ABCD of Income Tax & therefore completely relied on the above named tax consultant, who without informing him & others, claimed excess deduction under chapter VI-A of the IT Act & claimed refund. It was Patil who cheated all the employees & claimed excess deduction in their returns without informing them for his own benefit. The fact of the cheating came to light when a survey u/s 133A was conducted at the premises of Patil. When the fact that this kind of fraud was made in the name of a number of persons all of them complaint to the Economic Offence Wing of Police, against the tax consultant Patil. It is also apparent that there is no mistake of the assessee but it was the hidden interest of the tax consultant who triggered the gun by using the shoulders of the assessee & many more for his own benefit.' Also read: Capital gain on property: How to pay lower LTCG tax using indexation benefit What did ITAT Pune say about Shinde's action post the fraud coming to his notice According to the judgement order, here's what ITAT Pune said: It is also found that as soon as the fact of excess deduction claimed, came to the knowledge of the assessee (Shinde) he immediately paid the due tax with interest, even before the issue of notice under Section 148 & contacted another genuine tax consultant who prepared and furnished correct return in response to the notice under Section 148. We find that the Assessing Officer has levied a penalty under Section 270(A) of Rs 1,46,760 on the basis of the fact that the correct income was not returned voluntarily but only after issue of notice under Section 148. It is also found that when the notice under Section 148 was issued the appellant (Shinde) has disclosed his correct income & paid the due tax before issue of notice. We also find that the Income Tax Department Assessing Officer has accepted the return as it is, which was furnished by the appellant (Shinde) in response to the notice under Section 148. ITAT Pune final judgement ITAT Pune deleted the tax notice and thus the penalty of Rs 1.4 lakh stood what ITAT Pune said: We cannot accept the contention of Ld. DR (Income Tax Department lawyer) that the revised return was not voluntary therefore the penalty under Section 270(A) is inevitable. In this regard the contention of counsel (Shinde's lawyer) is also important wherein he stated that the due tax along-with interest was already paid before the issue of notice under Section 148 & admittedly the return of income (ITR) could not be filed as the due date was already over. We find force in the arguments of the counsel of the assessee (Shinde) that the amount of tax & interest was deposited voluntarily much prior to the issue of notice under Section 148 since the income tax with interest was deposited by the assessee on 28-05-2019 whereas the notice under Section 148 was issued on 25-02-2020. Judgement: 'Considering the totality of the facts of the case, we are of the considered opinion that this is not a fit case to impose penalty u/s 270(A) & accordingly the order passed by Ld. CIT(A)/NFAC is set-aside & the Assessing Officer is directed to delete the penalty of Rs 1,46,760 imposed u/s 270(A). Thus, the grounds of appeal raised by the assessee are allowed.' What is the significance of this judgement for other taxpayers? ET Wealth Online reached out to a number of lawyers and chartered accountants to get their take on the importance of this judgement for other taxpayers. Here's what they said: Rahul Sateeja, Partner, DMD Advocates, says: 'This ruling marks a significant development in tax penalty jurisprudence. It emphasises that even under the newer Section 270A regime, tax penalties are not merely about ticking boxes but involve a fair process that considers the taxpayer's intent and actions. The key takeaway from this ruling is that it reassures taxpayers that if they are honest and proactive—even when faced with mistakes or misleading advice—they are protected by law. Salaried taxpayers and those relying on consultants now see a tribunal recognising their situation and not penalising them for third-party misleading advice or fraud.' Gopal Bohra, direct tax partner, N. A. Shah Associates LLP says: 'In this case, the taxpayer was unaware about the incorrect or excessive claims made by the consultant in his income tax return and had relied entirely upon the consultant's expertise. Subsequently, when he came to know about the incorrect or excessive claim in his return, he promptly recomputed the correct tax liability and interest thereon and voluntarily deposited. This he has done before any notice could be issued by the tax department and this proactive approach saved him from penal consequences. While the applicability of this decision to other cases would depend on the specific facts involved, however, this may serve as a relevant precedent in a situation where a taxpayer voluntarily pays the correct tax and interest before receiving any notice, and is able to demonstrate bona fide reliance on third party consultant along with a lack of his personal knowledge of the tax laws.' Kunal Savani, Partner, Cyril Amarchand Mangaldas, says: 'This is a welcome judgment, particularly in times where taxpayers often face genuine hardship in filing a revised ITR beyond the prescribed due date. The judgment also underscores the bona fide of a taxpayer and the principle that the taxpayer must approach with clean hands, as was demonstrated in this case, where the taxpayer proactively paid the taxes along with applicable interest immediately upon being made aware of the consultant's error, and notably, even before receiving any demand notice.' Ritika Nayyar, Partner, Singhania & Co., says: 'The judgment lays emphasis that due to the assessee's bonafide intentions, proactiveness to make things right, no intention of tax evasion would have weightage over mistakes done in ITR without his knowledge, even if it led to under reporting of income. If the assessee due to his different technical background, fully relied on his tax consultant, who undertook a fraudulent act for which the assessee had no knowledge and as soon as he became aware, he rectified it suo moto, and should not be held responsible or punished ( be it financially) for someone else's malafide act. So if one is aware and prompt in his corrective actions, along with facts and evidence, he can demonstrate his genuine position and get relief from such a penalty.' Jay N. Bhansali, Advocate, Bombay High court, says: 'In the said case, involving peculiar facts, the Appellate Tribunal held that improper deduction claimed in reliance on professional advice—being influenced by an advisor's hidden agenda—should not attract penalties if there was no willful intent by the taxpayer to evade tax. It further clarified that taxpayers who voluntarily correct such errors and pay taxes before detection may be spared from penal consequences. The ruling reaffirms the principle that not every ineligible claim warrants a penalty, especially in cases of bona fide error. With the Income-tax Department intensifying scrutiny of improper deductions, this decision offers timely relief to similarly affected taxpayers.' N.R. 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New Indian Express
17 minutes ago
- New Indian Express
66 Naxalites surrender in five Chhattisgarh districts; 49 carry total reward of Rs 2. 27 crore
BASTAR: A total of 66 Naxalites, including 49 carrying a cumulative reward of Rs 2. 27 crore, surrendered in five districts of Chhattisgarh's Bastar division on Thursday, police officials said. While 25 cadres surrendered in Bijapur, 15 laid down arms in Dantewada, 13 in Kanker, eight in Narayanpur and five in Sukma, they said, adding 27 were women. The ultras surrendered before senior police, Central Reserve Police Force (CRPF), Border Security Force (BSF) and Indo Tibetan Border Police (ITBP) personnel citing disappointment with the hollow Maoist ideology, atrocities committed by Naxalites on innocent tribals and growing internal differences within the banned outfit, an official said. "They also claimed to be impressed by 'Niyad Nellanar' (your good village) scheme of the state government, aimed at facilitating development works in remote villages, new surrender and rehabilitation policy of the state government and Poona Margham (Rehabilitation for Social Reintegration), a rehabilitation initiative launched by Bastar Range police," he added. "Of the 25 who surrendered in Bijapur, 23 carried a collective bounty of Rs 1.15 crore. They include Ramanna Irpa (37), Odisha state committee member and special zonal committee member of Maoists who carried a reward of Rs 25 lakh, and his wife Rame Kalmu (30), a platoon party committee member (PPCM) who carried bounty of Rs 8 lakh," Bijapur Superintendent of Police Jitendra Kumar Yadav said. Sukku Kalmu (38), Bablu Madvi (30), Kosi Madkam (28) and Reena Vanjam (28), who were active in crucial positions in different formations of Maoists among other surrendered cadres, carried bounty of Rs 8 lakh each, Yadav added. In Dantewada, five of the 15 surrendered cadres carried total reward of Rs 17 lakh, Dantewada Additional Superintendent of Police Udit Pushkar said.
News18
17 minutes ago
- News18
He chose to threaten constitutional body: EC on Rahul's Karnataka claims
Agency: Last Updated: July 24, 2025, 19:15 IST Representational image (Image: News18) New Delhi, Jul 24 (PTI) The Election Commission on Thursday hit out at Congress leader Rahul Gandhi's claim that it allowed cheating in a Karnataka constituency and said that besides making 'baseless allegations", the leader of opposition in the Lok Sabha chose to 'threaten" a constitutional body. Gandhi said the Congress has 'concrete 100 per cent proof" that the Election Commission (EC) allowed cheating in a constituency in Karnataka and warned the poll panel that it will not get away with this 'because we are going to come for you". Responding to Gandhi's statement, the EC said that as far as the Karnataka elections are concerned, it is 'highly unfortunate" that rather than filling an election petition as per Section 80 of the Representation of the People Act 1951, or if filed, awaiting the verdict of the high court, he not only made 'baseless allegations" but has also 'chosen to threaten" the EC, a constitutional body. Gandhi alleged that the EC is not functioning as the Election Commission of India, and is 'not doing its job". Asked about the Special Intensive Revision (SIR) of electoral rolls in Bihar and RJD leader Tejashwi Yadav's reported remarks that the option of boycotting the Bihar assembly polls was open, Gandhi told reporters in the Parliament House premises that his party has 'concrete 100 per cent proof" of the EC allowing cheating in a seat in Karnataka. Swipe Left For Next Video View all 'Not 90 per cent, when we decide to show it to you, it is a 100 per cent proof," the former Congress president said. 'We just looked at one constituency and we found this. I am absolutely convinced that constituency after constituency this is the drama that is taking place … I want to send a message to the Election Commission — if you think you are going to get away with this, if your officers think they are going to get away with this, you are mistaken. You are not going to get away with this because we are going to come for you," Gandhi said. PTI NAB DIV DIV (This story has not been edited by News18 staff and is published from a syndicated news agency feed - PTI) view comments News agency-feeds He chose to threaten constitutional body: EC on Rahuls Karnataka claims Disclaimer: Comments reflect users' views, not News18's. Please keep discussions respectful and constructive. Abusive, defamatory, or illegal comments will be removed. News18 may disable any comment at its discretion. By posting, you agree to our Terms of Use and Privacy Policy.
