Tax Law (Amendment) Bill, 2024: Stricter Compliance Measures Introduced for Non-Filers and Enhanced Tax Enforcement

Tax Law (Amendment) Bill, 2024: stricter compliance for non-filers, restrictions on property and bank transactions, real-time tax reporting, and enhanced enforcement measures to curb tax evasion

1. Title and Commencement

• What it says: This law is called the Tax Laws (Amendment) Act, 2024. It takes effect immediately unless stated otherwise.
• What it means: The law applies as soon as it is officially approved.

2. Amendments to the Sales Tax Act, 1990

• Input Tax Adjustments (Section 8B):
  • The FBR can use automated systems to adjust or defer tax claims by businesses.
  • Businesses can challenge these decisions by submitting a complaint to the Commissioner, who must decide within 60 days.
• Bank Account Restrictions (New Section 14AC):
  • If someone doesn’t register for tax, the FBR can freeze their bank accounts.
  • Once they register, the restriction will be removed within two working days.
  • If someone disagrees, they can appeal within 30 days.
• Property Transfer Restrictions (New Section 14AD):
  • The FBR can stop the transfer of property for people who haven’t registered for tax.
  • This restriction will also be lifted two days after they register.
• Other Actions for Non-Registration (New Section 14AE):
  • The FBR can:
    • Seal business premises.
    • Seize movable assets.
    • Appoint a manager (receiver) to handle a business.
  • Public notices must be issued before taking these steps, and people will be given a chance to explain themselves.
• Appointment of Experts and Auditors (New Section 32B):
  • FBR can hire specialists or auditors to assist in audits, investigations, or valuations.

3. Amendments to Islamabad Capital Territory (Tax on Services) Ordinance, 2001

• Real-Time Integration:
  • Service providers (e.g., restaurants, salons) in Islamabad must link their business systems with FBR for real-time tax reporting.

4. Amendments to the Income Tax Ordinance, 2001

• Restrictions on Transactions by Non-Filers (New Section 114C):
  • Unregistered individuals cannot:
    • Buy or register vehicles (except motorcycles, rickshaws, and small pickups).
    • Transfer high-value properties.
    • Invest in securities like mutual funds.
    • Make large withdrawals from bank accounts.
  • These restrictions are removed once they register and declare their sources of income.
• Sharing of Information with Banks (New Section 175AA):
  • FBR will share taxpayer details (like income and account data) with banks.
  • Banks must report discrepancies between their data and FBR’s records.
• Definition of Eligible/Ineligible Persons:
  • Eligible Person: Someone who files tax returns and has enough declared income/assets.
  • Ineligible Person: Someone who doesn’t meet these requirements.

5. Amendments to the Federal Excise Act, 2005

• Tracking Counterfeit Goods:
  • Businesses must use electronic stamps or barcodes to monitor taxable goods.
  • Counterfeit goods will be confiscated.
• Additional Powers for Officers:
  • FBR can assign officers to enforce these new rules and take action against counterfeit goods.

Why is This Important?

• To make sure everyone pays taxes based on their income and spending.
• To modernize tax enforcement using technology.
• To increase government revenue for economic growth.
• To stop tax evasion by imposing restrictions on non-compliant individuals and businesses.