The proposed tax laws include measures to prohibit the opening of bank accounts for non-compliant individuals, the threat of sealing unregistered businesses, and restrictions on their financial activities and the purchase of vehicles over 800cc.
The bill titled The Tax Laws (Amendment) Act 2024 was introduced by Finance Minister Muhammad Aurangzeb. It proposes amendments to a slew of tax-related laws, such as the Sales Tax Act 1990, ICT (Tax on Service) Ordinance 2001 and Income Tax Ordinance 2001.
Restrictions regarding financial transactions
Under the proposed bill, restrictions will be imposed on economic transactions of tax evaders. The manufacturers of a motor vehicle or vehicle registering authority of the excise and taxation department will not accept or process any application of an ineligible person for booking, purchase or registration of a motor vehicle.
Likewise, the board restricts the registration, recording, attestation and transfer of any immovable property whose value must be notified by the FBR. The authority will not accept or process such transactions that exceed the notified value.
Under the proposed bill, banks will be required to report high-risk individuals engaging in financial activities beyond their declared assets and turnover.
In addition, it will install point-of-sale (POS) devices in the Islamabad Capital Territory to collect sales tax on taxable services, extending the system beyond retail shops.
Penalties
The law seeks to grant tax commissioners the authority to seal business premises, seize assets and suspend bank accounts of businesses that fail to register for sales tax.
It proposes that these steps will be lifted within two days once compliance is achieved. Appeals against such actions can be filed with the chief commissioner of FBR’s Inland Revenue wing within 30 days.
Exemptions
The bill includes certain exemptions such as financial transactions involving the purchase of rickshaws, motorcycle rickshaws, tractors and small vehicles with engine capacities up to 800cc. The FBR will notify restrictions or limitations for the purchase of trucks and buses.
If properly disclosed in tax returns, transactions related to loans or inheritance will also be exempt from restrictions. Non-residents and public companies are also excluded.
The bill also proposes that the FBR will not pursue concealment cases against individuals who disclose undeclared assets related to remittances or inheritance.
