The National Assembly Standing Committee on Finance will review the Tax Laws (Amendment) Bill, 2024 on Tuesday, January 21, which aims to impose stringent restrictions on non-filers. If passed, the new bill will prohibit non-filers from engaging in significant economic activities, including purchasing vehicles over 800cc, acquiring high-value property, and making stock market investments above certain thresholds.
High-ranking government officials confirmed that, despite the passage of the bill, the government will not immediately remove higher withholding tax rates (WHT) for non-filers. Instead, this change will be implemented gradually in the coming fiscal year (2025-26), after the bill is enforced. Non-filers are currently subject to higher WHT, which raises concerns about how the Federal Board of Revenue (FBR) will make up for potential revenue losses. Withholding taxes currently account for about 70% of total direct tax collections.
New Restrictions on Non-Filers
The bill introduces several key restrictions for non-filers:
- Vehicles: Non-filers will be banned from purchasing, booking, or registering vehicles over 800cc.
- Property and Investments: There will be limits on property acquisitions and stock purchases.
- Banking: Non-filers will be barred from opening bank accounts and will face transaction limitations. However, they will still be allowed to purchase motorcycles, rickshaws, and tractors.
Non-filers will also be restricted from selling or transacting in securities, mutual funds, or any financial instruments, including the ability to open accounts with authorized brokers or financial institutions.
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Enforcement and Penalties
The bill grants the FBR and financial institutions the authority to freeze bank accounts and seize assets of non-registered individuals and businesses. Affected individuals will have a chance to appeal to the Chief Commissioner Inland Revenue to unfreeze accounts or lift restrictions once they complete sales tax registration. The bill also provides the Chief Commissioner with powers to seal business premises or appoint a receiver to manage taxable activities of non-compliant individuals.
The restrictions will take effect once the federal government issues the necessary notification. The bill also considers the family members of filers, including children up to 25 years old and spouses, as part of the tax filing entity.
This sweeping legislation aims to curb the number of non-filers and promote tax compliance, but concerns remain regarding its potential impact on businesses and revenue collection.
