The Senate Standing Committee on Finance approved the Tax Laws Amendment Bill 2024, which would impose restrictions on non-filers regarding opening bank accounts and buying and selling vehicles, shares, and property.

The committee also formed a subcommittee to address the solar scandal.

Senator Salim Mandviwala presided over the committee meeting. It was held in Islamabad to discuss the tweaks to tax law.

Committee members, including the chairman, raised questions, emphasising that individuals would need to declare their purchases in their tax returns before buying anything. Many people operate business accounts but “are not registered as filers.”

PTI Senator Shibli Faraz commented that tax evaders “are often let off while genuine taxpayers are pursued.” This statement elicited laughter from the committee members. In response, State Minister for Finance Ali Pervaiz pointed out that “even the senator himself sometimes tries to hide.”

The committee chairman inquired about the status of the billions of rupees involved in the solar scandal, noting that after the filing of a case, the matter has stalled.

The Federal Board of Revenue officials stated that the suspects are absconding. The state finance minister stated that efforts are under way to raise the tax-to-GDP ratio to 13.5 per cent.

The committee approved a provision to keep taxpayer data confidential for tax auditors and experts. It also approved a clause imposing restrictions on non-filers regarding the purchase and sale of vehicles, bank accounts, shares, and property. A provision for sharing the data of high-risk individuals with banks was also approved.

Tax amendment bill

On Wednesday, the government introduced a new bill in the National Assembly aimed at empowering tax authorities with extensive authority to enforce compliance with tax regulations.

Key measures include prohibiting non-compliant individuals from opening bank accounts and imposing restrictions on their financial transactions and the purchase of vehicles over 800cc. The bill threatens to seal unregistered businesses.

The Tax Laws (Amendment) Act 2024, presented by Finance Minister Muhammad Aurangzeb, suggests amendments to several tax-related laws, including the Sales Tax Act of 1990, the ICT (Tax on Service) Ordinance of 2001, and the Income Tax Ordinance of 2001.

The proposed legislation aims to eliminate the current classifications of ‘filers, non-filers, and late filers,’ replacing them with new terms: ‘eligible person’ and ‘ineligible person.’

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The newly proposed tax bill aims to simplify tax collection and combat evasion, but it has sparked concerns regarding the extensive powers granted to tax authorities and the potential repercussions for small businesses and individual taxpayers, particularly women.

The bill defines an “eligible person” as an individual who has filed their most recent income tax return and has declared adequate resources in their wealth statements, or in the case of companies, in their financial statements.

Moreover, the legislation extends the definition of eligible persons to include their immediate family members, which encompasses parents, spouses, sons under 25, unmarried, widowed, or divorced daughters, and children with disabilities.