The National Assembly Standing Committee on Finance and Revenue has deferred the implementation of Section 114C of the Tax Laws (Amendment) Bill, 2024, which seeks to impose restrictions on economic transactions by non-filers.
Decision to Postpone Restrictions
The committee opted to delay these measures until the Federal Board of Revenue (FBR) implements necessary technological changes in its online systems. This decision was taken during a meeting held at the Parliament House on Tuesday, where Bilal Azhar Kayani, Convener of the Sub-Committee of the Standing Committee on Finance and Revenue, presented a report on “The Tax Laws (Amendment) Bill, 2024.” The report was subsequently adopted by the committee.
Government’s Perspective
Minister of State for Finance, Ali Pervaiz Malik, assured that postponing restrictions on non-filers would not disrupt ongoing efforts to document wealthy individuals who have yet to file income tax returns. He emphasized the need to enforce compliance rather than relying on non-filers as a revenue source. Additionally, he noted that the FBR already possesses data on immovable property transactions and will continue taking action against non-filers. “We will return to the committee with a technological solution for implementing Section 114C,” he stated.
Technical Readiness and Future Considerations
The sub-committee, chaired by Bilal Azhar Kayani, recommended that the FBR first demonstrate an updated online system before reconsidering the restrictions on non-filers. One proposal is to revisit the section as part of the budget process in June 2025, allowing time for the development of user-friendly systems to minimize unintended consequences.
Concerns Over Economic Impact
MNA Mirza Ikhtiar Baig raised concerns that implementing restrictions on non-filers could result in capital flight from Pakistan. Meanwhile, FBR Chairman Rashid Mahmood Langrial requested two months for the development of necessary technological tools to enforce the restrictions effectively.
Collaboration with Other Authorities
The committee recommended that the National Database and Registration Authority (NADRA), provincial excise departments, and land authorities collaborate with the FBR to expedite the system’s development. The FBR Chairman also clarified that transactions involving non-resident individuals and public companies would be exempt from the non-filer restrictions.
Proposed Amendments and Next Steps
Committee Chairman Syed Naveed Qamar endorsed the sub-committee’s recommendation to suspend the implementation of Section 114C until the FBR develops the required tools. He urged the Revenue Division to clarify “cash and equivalent assets” and ensure the new system is operational within two months.
The sub-committee suggested an amendment to Section 114C, proposing that the term “Board” be replaced with “Federal Government.” Additionally, a value threshold was recommended to safeguard low- and middle-income citizens, particularly first-time property buyers. To support this decision, the FBR has shared aggregate data on property transactions for FY 2023-24 with the committee.
