NA body adopts report on Tax Laws (Amendment) Bill: Restrictions on transactions of non-filers from July 1
ISLAMABAD: The National Assembly Standing Committee on Finance and Revenue, Wednesday, adopted the report on Tax Laws (Amendment) Bill, 2024 to impose restriction on economic transactions of non-filers through Finance Bill 2025-26 from next fiscal year.
The threshold proposed for valuation of immovable properties of non-filers has been abolished under the revised Tax Laws (Amendment) Bill, 2024.
The revised Tax Laws (Amendment) Bill, 2024 was presented before the committee here on Thursday.
Tax laws bill may be part of FY26 Finance Bill: Non-filers to face curbs on economic deals
From July 1, 2025, the government will impose strict restriction on economic transactions of non-filers through the next Finance Bill.
During the committee proceedings, the committee adopted the report of the sub-committee and clear the amendments made by the Federal Board of Revenue (FBR) in the Tax Laws (Amendment) Bill, 2024.
On the conclusion of the meeting, Syed Naveed Qamar, chairman of the committee told Business Recorder that now the Bill would be made part of the Finance Bill 2025-26 and it would be debated clause by clause during review of the finance bill (2025-26). The adoption of the report of the sub-committee would result in detailed review of the bill during the budget finalisation exercise for 2025-26, he added.
During the last meeting, the committee had deferred new Section 114C (restriction on economic transactions of non-filers) of Tax Laws (Amendment) Bill, 2024 till the FBR demonstrates necessary technological changes in its online systems.
The bill will introduce measures to detect and take corrective measures against under-declarations of income/sales by fetching taxpayers banking system data and match with the declaration filed with the FBR.
The chair emphasised that the Revenue Division should revisit Clause (5)(a) to provide greater clarity on the term 'cash and equivalent assets.' He also directed the Revenue Division to finalize the updated online system/mobile app and present a demonstration to the committee within two months.
Sub-committee recommended in section 114C, in clause (1) (b) the word 'Board' be replaced with the word 'Federal Government'. The Federal Government may determine the value threshold for transactions affected by this restriction to ensure that property transactions conducted by common citizens and the lower- and middle-income class—particularly first-time property buyers or those purchasing their primary residential property—are not impacted.
As per the direction of the Sub-Committee, the FBR has shared aggregate data on property transaction values for FY 2023-24.
According to 'Tax Laws (Amendment) Bill, 2024', non-filers will be prohibited from purchasing, booking, registration of vehicles over 800cc, acquiring property beyond a specified limit, and making stock purchases beyond a certain threshold.
Additionally, non-filers will not be able to open bank accounts, and there will be restrictions on the number of banking transactions they can conduct. However, non-filers will still be allowed to purchase motorcycles, rickshaws, and tractors.
The purpose of the bill also imposed restriction on economic transaction by certain persons such as 'any person, authorized to sell securities including debt securities or units of mutual funds including a person authored to open and maintain account or clear such transactions, shall not sell, open an account or clear sale of securities, mutual funds, to an ineligible person being an individual or an association of persons.'
Copyright Business Recorder, 2025
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Express Tribune
3 hours ago
- Express Tribune
Taxman gets arrest powers
Listen to article A National Assembly panel on Saturday approved special powers for tax authorities to arrest individuals involved in tax fraud, while it deferred the approval of another fiscal law that would have suddenly deprived government entities of their cash surpluses. Meanwhile, teachers and researchers will now be subject to full income tax, as the International Monetary Fund (IMF) did not agree to the government's proposal to extend the 25% income tax rebate for another fiscal year. Federal Board of Revenue (FBR) Chairman Rashid Langrial informed the National Assembly Standing Committee on Finance that the IMF had refused to extend the rebate. The committee, chaired by Syed Naveed Qamar, approved legal powers for the FBR to arrest taxpayers involved in tax fraud without prior court approval. However, additional safeguards were added to limit the discretionary use of these powers. At one point, Qamar remarked that the tax fraud "law has been borrowed from the National Accountability Bureau". The Senate Standing Committee on Finance had already cleared the controversial proposal. Now, following minor amendments by the National Assembly panel, the bill is expected to become law from July 1. Tax fraud has been defined as: "knowingly, intentionally or dishonestly doing any act or abets any action to cause loss of tax under this Act, including: using or preparing false, forged and fictitious documents including return, statements, annexures and invoices; false claim of input tax credit based on fictitious transactions; issuance of any tax invoice without supply of goods; tampering with or destroying of any material evidence or documents required to be maintained; generating fake input through manipulation of return filing system of the Board and making fake entries in the sales tax returns or in the annexures; and making fictitious compliance of section 73, including routing of payments back to the registered person, or for the benefit of the registered person, through a bank account held by a supplier or a purported supplier." Upon committing any of the above offences, the FBR will have the authority to arrest the individual without first seeking a warrant from any court of law. FBR Chairman Rashid Langrial said the criminality of tax fraud has been divided into two parts. In some cases, court permission will be required before an arrest is made. He explained that crimes such as suppression of taxable supplies under the Sales Tax Act, suppression or nonpayment of withholding tax for more than three months, dealing in goods liable to confiscation and making taxable supplies without registration will require court approval for arrest. According to the proposal, an Inland Revenue officer not below the rank of assistant commissioner – or any officer authorised by the board – may initiate an inquiry upon approval from the commissioner, if there is material evidence pointing to the commission of tax fraud or an offence warranting prosecution under the act. The inquiry officer shall have the powers of a civil court under the Code of Civil Procedure, 1908, including summoning and enforcing attendance of any person, examining on oath, requiring discovery and production of documents and receiving evidence on affidavits. The inquiry officer must complete the inquiry within six months. During proceedings, the officer must provide the accused with a chance to be heard and confront them with details of the alleged fraud. A final report will then be submitted to the commissioner, who may either approve a full investigation, request further details, or close the matter. Upon approval, the investigation must be completed within three months. The board may authorise a commissioner — through a three-member committee notified by the chairman — to issue an arrest warrant if the tax loss exceeds Rs50 million. Arrests will only be made if the accused fails to respond to three notices, attempts to flee, or is likely to tamper with evidence. When asked, Langrial said the accused can also be arrested at the airport if there is suspicion of an escape attempt. Cash surplus The standing committee held an extended discussion on a government proposal to assert full rights over the cash surpluses held by state-owned enterprises. The proposed amendment to the Public Finance Management Act aimed to grant the federal government control over these surpluses. "The federal government's budget deficit would never end, and it now wants to bankrupt the public sector companies," Syed Naveed Qamar said. Finance Minister Muhammad Aurangzeb argued that the companies were acting like "states within a state" and were not cooperating. He added that even government-nominated board members were not being heeded, blaming bureaucrats for the lack of progress. Minister of State for Finance Bilal Kayani withdrew the bill from the agenda, saying the government would reintroduce it after incorporating the committee's recommendations to strike a balance between fiscal discipline and autonomy. One major state-owned company was reported to be sitting on a cash surplus of Rs253 billion.
Express Tribune
4 hours ago
- Express Tribune
Govt urged to rethink new taxes
Listen to article E-commerce and chain store strategists have demanded the government rationalise the proposed taxes on online and registered businesses in order to maintain the pace of documentation in the retail sector and promote financial inclusion in the economy. They urged the government to refrain from burdening taxpayers with additional taxes and duties to encourage the formalisation of retail and online businesses, which will promote the generation of long-term and sustainable dividends for the economy. They also called on the government to pause the immediate enforcement of these policies, and instead initiate a structured dialogue with stakeholders to co-create pragmatic and growth-friendly tax policies. Pakistan E-Commerce Association (PEA) Karachi Chapter President Shoaib Bhatti said that the proposed tax measures in the financial bill will severely risk the e-commerce sector, disrupting both established and small businesses by imposing an excessive compliance burden all at once. He urged the government to avoid imposing the additional 2% withholding sales tax on e-commerce and retail sectors, which are already paying 18% general sales taxes. In comparison, informal retail segments in major shopping centres and bazaars are not paying taxes at all, he said. Pakistan's e-commerce sector has grown over 35% annually in the past five years, with over 100,000 small online sellers active as of today, supporting the incomes of over a million people nationwide, added Bhatti. Increasing the tax burden on this segment, he said, will be tantamount to slowing down its growth and contribution to the national economy. According to estimates, the total market size of the e-commerce sector is estimated to be Rs2.2 trillion ($7.7 billion), which is still under 2% of the national GDP and up to 4% of the retail segment. Chainstore Association of Pakistan (CAP) Chairman Hasan Javed remarked that the new tax will create an imbalance between documented and undocumented retail and online segments, as one pays an overall 20% GST and the second one will pay merely 2%, hence promoting a cash economy. "Established online and chain stores are already paying 15-16% provincial taxes to the government, and an additional 5% federal levy will increase their cost of doing business. Therefore, we appeal to the provincial government to reduce the tax rate at their end," he remarked. The proposed tax measures place heavier obligations on e-commerce than on the traditional retail and wholesale sectors. Rather than encouraging formalisation, these measures could push businesses back into informality — or out of operation entirely, he said. The Finance Bill introduces multiple taxes and complex procedures across all related businesses, with no stakeholder consultation or phased rollout, which could adversely hit the sector. What's more, a number of e-commerce stores shut down in the past two years due to tough competition among players and higher logistics and operating costs. Saad Shah, CEO Ucaaz, said established e-commerce and chain stores have been highly regulated with tax compliances and equipped with payment systems, however, increasing the burden of tax and levies on these stores will not be favourable for them. He pointed out that various online and chain stores not only offer high-quality branded products to customers, but also offer them handsome discounts on products due to their efficient business models which attract footfall and generate tax revenues for the government, unlike grocery shops in major retail and wholesale markets in big cities. The e-commerce sector is developing a growing and inclusive ecosystem that also generates jobs for the youth, and provides entrepreneurial and investment opportunities for the masses. Disrupting this sector will ultimately hurt all stakeholders, stated Shah.
Express Tribune
4 hours ago
- Express Tribune
Inflation, rupee dip lift FBR taxes
Listen to article Owing to massive inflation-driven increases in nominal collections, sharp currency depreciation, and a greater reliance on indirect taxes, the Federal Board of Revenue (FBR) has achieved its annual revenue growth rise from an average of 18% over the past decade to 24% in the recent five years. The FBR has demonstrated a remarkable acceleration in tax collection growth over the past five years, surpassing the average pace observed over the preceding decade. Data from the FBR, Ministry of Finance (MOF), and Arif Habib Limited (AHL) Research reveals that annual revenue growth averaged 24% during this period, significantly higher than the 10-year average of 18%. "The rise in FBR's annual revenue growth, from an average of 18% over the past decade to 24% in the recent five years, reflects a mix of policy adjustments and economic factors," noted AHL. "The higher growth is partly attributed to inflation-driven increases in nominal collections, currency depreciation, and a greater reliance on indirect taxes." This upward trend illustrates both nominal tax collections and growth rates, with the former rising from Rs3.11 trillion in the base year, fiscal year 2016, to Rs14.13 trillion in the most recent year — reflecting a strong compound growth trajectory. Notably, growth rates peaked at 35% in certain years before moderating, highlighting the recent surge in tax mobilisation. Several factors have driven this performance. Inflation and currency depreciation played a central role, inflating nominal tax collections, especially on goods and services subject to ad valorem taxes. The weakening rupee also raised the local currency value of import-based taxes, a key revenue source. On the policy front, the withdrawal of tax exemptions under International Monetary Fund (IMF) programmes expanded the taxable base, while the government's reliance on indirect taxes — such as sales tax and customs duties — further fuelled collection growth, though it raised equity concerns. Administrative reforms, including efforts to document the informal economy, digitise tax filings, and curb evasion, also contributed to improved compliance and revenue outcomes. Despite this strong showing, questions remain over the sustainability of such growth. Much of the recent gains are rooted in inflationary effects and indirect taxation — factors that may not sustain momentum without deeper structural reforms. Reliance on import-based taxes leaves revenues vulnerable to external shocks or a decline in trade volumes, while over-dependence on indirect taxes disproportionately burdens lower-income groups, underscoring the need for a more balanced and equitable tax policy. Looking ahead, the FBR's continued progress will depend on its ability to broaden the tax base by formalising untapped sectors, shift towards more stable revenue streams such as direct taxes, and enhance transparency to build public trust and voluntary compliance. While the recent growth trajectory signals a positive departure from past trends, its translation into lasting fiscal strength will ultimately hinge on the government's commitment to comprehensive and sustained reforms amid evolving economic challenges.
