The Senate Standing Committee on Finance has unanimously passed the Tax Laws Amendment Bill 2024, introducing comprehensive measures to enhance tax compliance and tighten oversight on taxpayers, including filers and non-filers.
The bill aims to close tax loopholes and increase Pakistan’s tax-to-GDP ratio to 13.5% within three years.
Key Provisions:
According to Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial, a pre-audit system will replace the existing post-audit approach. Taxpayers must now justify their income sources before making purchases or investments exceeding 130% of their declared income, covering areas like property, vehicles, and stock market transactions.
Pensioners and non-filers will face stricter measures, such as limitations on bank accounts to a Rs1 million transaction cap, with tax returns required beyond this limit.
Private auditors will gain access to bank transaction records to ensure compliance, while banks must share data on high-risk individuals with the FBR. Businesses that fail to register risk closure, property confiscation, and account freezes.
Additionally, service providers, including Islamabad restaurants, must integrate their systems with the FBR’s computerized platform for improved monitoring.
Recommendations:
The committee proposed extending the pre-audit system to sectors dealing in gold and foreign currency, a recommendation under review.
Impact on Filers and Non-Filers:
- Filers: Can make purchases up to 130% of declared income but must justify sources for higher amounts.
- Non-Filers: Restricted to Rs1 million transaction limits in bank accounts and must file tax returns for amounts exceeding this threshold.
Finance Minister Muhammad Aurangzeb expressed optimism about the reforms, highlighting their potential to expand the tax net, improve transparency, and enhance revenue collection.
