Under the Taxation Laws (Amendment) Bill, 2024, the Federal Board of Revenue (FBR) will now share income tax return data with banks for cross-matching with bank records.
This step aims to tighten compliance and reduce tax evasion by implementing restrictions on the economic activities of non-filers.
The bill defines two categories: “qualified persons,” who have filed income tax returns and disclosed sufficient resources, and “ineligible persons,” who fail to meet these standards.
Non-applicants will be prohibited from purchasing or registering cars, conducting real estate transactions beyond specified limits, trading securities, and opening or operating bank accounts.
The law also allows the FBR to exchange banking and tax information of high-risk individuals with financial institutions.
The FBR may share basic data with banks, including turnover, taxable income, wealth data and bank account numbers declared in income tax returns. In return, banks must report discrepancies in their records against the algorithms provided by the FBR.
The Commissioner of Internal Revenue has the right to deny bank account operations to individuals who fail to register for sales tax under the Sales Tax Act. Similar restrictions will apply to the registration of real estate and business activities of non-compliant individuals.
In an effort to enforce tax compliance, the bill gives chief commissioners the power to close business premises, seize movable property, or appoint a receiver to manage the taxable activities of unregistered entities.
Furthermore, banks are prohibited from opening or maintaining accounts for ineligible persons, with exceptions for Asaan accounts with minimum limits. Cash withdrawal from bank accounts exceeding the limits set by the FBR will not be allowed.
However, exceptions include the purchase of motorcycles, rickshaws, tractors and light vehicles with an engine capacity of up to 800 cc, which will remain unrestricted for ineligible persons. Investment in securities will also be capped within the limits set by the FBR.