Non-Filers Allowed to Buy Smaller Vehicles
In a recent decision by the National Assembly Standing Committee on Finance and Revenue, non-tax filers in Pakistan have been granted permission to purchase certain categories of vehicles. The approved amendments to tax laws will now allow non-filers to buy:
- Rickshaws
- Motorcycles
- Tractors
- Cars up to 800cc engine capacity
This measure within The Tax Laws (Amendment) Bill, 2024 is expected to provide relief to individuals who are not currently tax filers, especially those who rely on these types of vehicles for their livelihoods or personal transportation.
Banks Mandated to Report Income Discrepancies
Alongside this relief, the committee also approved a significant step towards enhanced tax compliance. Banks will now be legally required to report transactions that exceed an individual’s declared income as stated in their tax returns.
This mandatory reporting is intended to:
- Identify potential tax evasion: By highlighting discrepancies between reported income and actual banking activity.
- Broaden the tax base: By bringing potentially under-reporting individuals into the tax net.
- Facilitate tax audits: By providing the Federal Board of Revenue (FBR) with crucial data for targeted investigations.
Key Decisions from the Standing Committee Meeting
The decisions were made during a meeting of the National Assembly Standing Committee on Finance and Revenue, chaired by MNA Naveed Qamar. Key highlights from the meeting include:
- Bill Review and Adoption: The committee reviewed The Tax Laws (Amendment) Bill, 2024, unanimously adopting a report presented by MNA Bilal Azhar Kayani.
- Clarity on “Cash and Equivalent Assets”: The committee requested a clearer definition of “cash and equivalent assets” within the bill.
- FBR Online System Update: The FBR is tasked with finalizing its updated online system and mobile app for tax administration, with a demonstration expected within two months.
- Property Transaction Thresholds: The committee recommended that the federal government, not the FBR, should set transaction value thresholds for property purchases to avoid unduly burdening lower and middle-income buyers. It clarified that until these thresholds are set, no one is ineligible for property transactions.
- Expanded Definition of “Eligible Person”: The definition was broadened to include parents, spouses, and dependent children as immediate family members.
- POS System Expansion: The FBR is directed to install Points of Sale (POS) systems at all Islamabad hotels and extend them to other service providers in the federal capital to improve sales tax collection.
- Data Sharing for Property Purchases: Nadra, provincial excise departments, and land authorities will share property purchase data with the FBR to enhance monitoring and tax collection.
- Hiring of Auditors and Experts: The committee approved hiring new personnel for the FBR but mandated immediate dismissal for any auditor leaking taxpayer information.
Concerns over Capital Flight
MNA Dr. Nafisa Shah voiced concerns that these extensive tax amendments could potentially lead to capital flight, negatively impacting the national economy. This concern was raised amidst discussions involving committee members, Minister of State for Finance Ali Pervaiz Malik, and senior finance officials.
Balancing Relief and Compliance
The approved tax amendments represent a dual approach: providing some relief to non-filers in specific vehicle categories while simultaneously implementing stricter measures to enhance tax compliance and broaden the tax base through bank reporting and data sharing. The long-term effects of these measures on tax revenue and the overall economy will be closely monitored.