Amended tax laws to tighten noose on non-filers

ISLAMABAD: National Assembly Standing Committee on Finance will take up money bill, “Tax Laws (Amendment) Bill, 2024,” on Tuesday (tomorrow) and government will soon prohibit non-filers from purchasing, booking, registration of vehicles over 800cc, acquiring property beyond a specified limit, and making stock purchases beyond a certain threshold.

Highly placed government officials told Business Recorder late Sunday night that the government will not immediately abolish higher rates of withholding taxes on non-filers after passage of the “Tax Laws (Amendment) Bill, 2024”. This would be done in a phase-wise manner because there is no justification of higher WHT rates after ban on transactions of non-filers.

But this withdrawal of withholding tax rates on non-filers would not be done in a one go. It would be done gradually and systematically after enforcement of the “Tax Laws (Amendment) Bill, 2024”. Changes in withholding tax regime would be done in the coming budget (2025-26), officials confirmed.

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It is not clear how the FBR will overcome revenue shortfall after withdrawal of higher rates of WHTs, as withholding taxes constitute nearly 70 percent of overall direct taxes collection, tax experts questioned.

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 is to impose restriction on economic transaction by certain persons such as “any person, authorised 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.”

The proposed legislation gives powers to direct bank companies, scheduled banks and other financial institutions, through an order in writing, to bar operation of the bank account of any person who fails to get registered.

The government will have the authority to seize the property of non-registered individuals involved in businesses. The Federal Board of Revenue (FBR) will release a list of individuals, and their accounts will be frozen.

The restrictions outlined in the bill will come into effect after the federal government issues a notification. Bank accounts will be frozen, and property transfers will be blocked for individuals who do not register them for sales tax. Accounts will; however, be unfrozen within two days after sales tax registration.

The Chief Commissioner Inland Revenue have the powers to seal the business premises, seize moveable property or appoint a receiver for the management of the taxable activity of a person.

Under the proposed legislation, individuals will be able to appeal to the Chief Commissioner to unfreeze accounts. For the purposes of this bill, parents and children of filers, including children up to 25 years old and spouses, will be considered as filers.

Copyright Business Recorder, 2025