The National Assembly Standing Committee on Finance is set to deliberate on the Tax Laws (Amendment) Bill, 2024, this coming Tuesday. The bill targets non-filers with severe restrictions, including prohibitions on buying or registering vehicles with engine capacities over 800cc, acquiring property beyond prescribed limits, and executing stock transactions above designated thresholds.
Officials indicate that while the immediate abolition of higher withholding tax (WHT) rates for non-filers isn’t planned, a gradual reduction is expected post-bill approval, with adjustments to be integrated in the fiscal 2025-26 budget to sustain revenue streams.
The legislation will also impose new limitations on non-filers regarding the opening of bank accounts and other specific financial dealings, although exceptions will be made for purchasing motorcycles, rickshaws, and tractors.
Significant enforcement powers will be granted to the Federal Board of Revenue (FBR), including the ability to freeze bank accounts and halt property transfers of non-compliant individuals. These measures will be actionable following a federal notification, with provisions to unfreeze accounts within two days post-sales tax registration.
Furthermore, Chief Commissioners of Inland Revenue will receive expanded powers to seal business premises, confiscate movable assets, or designate receivers to manage the taxable activities of non-filers.
Tax experts have voiced concerns over the anticipated revenue impacts due to the phased reduction of higher WHT rates, which are significant contributors to direct tax revenues, currently accounting for 70%.
Additional provisions in the bill include barring non-filers from selling securities, mutual funds, and opening new accounts, with financial institutions being mandated to restrict activities for these individuals.
The bill also outlines that immediate family members—parents, spouses, and children under 25—of registered taxpayers will be classified as filers. This move is seen as a strategy to improve compliance, broaden the tax base, and enforce tax laws more rigorously.
