Islamabad: The Federal Board of Revenue (FBR) has introduced new regulatory measures focusing on high-income earners and non-filers, aimed at boosting tax compliance and improving oversight of financial transactions. The regulations include caps on cash withdrawals, mandatory income proof for significant purchases, and stringent penalties for tax evasion, as the government seeks to broaden its tax base and reduce the informal economy.
According to Zameen.Com, under the new rules, annual cash withdrawals by high-income tax filers will be limited to PKR 30 million. Individuals with annual incomes exceeding PKR 10 million will need to provide proof of income when purchasing property, though they can still buy vehicles without additional documentation. Those earning below PKR 10 million are required to justify their incomes before making major purchases like real estate, vehicles, or investments in securities and mutual funds.
Additionally, Prime Minister Shehbaz Sharif has approved a plan that imposes severe restrictions on non-filers of tax returns. These individuals will be prohibited from performing various banking and financial transactions, including buying cars and property, with the exception of operating basic bank accounts such as the Asaan Account.
The FBR’s new strategy also targets unregistered manufacturers and wholesalers whose turnovers exceed PKR 250 million by freezing their bank accounts and imposing a PKR 1 million penalty. Retailers with turnovers above PKR 100 million will face similar punitive measures. Currently, a mere 14% of manufacturers are registered for sales tax, indicating a large gap in tax compliance.
To enforce compliance, the FBR intends to roll out digital invoicing and send notices to unregistered entities. Non-compliance will lead to severe repercussions, including frozen bank accounts and restricted utility services. This initiative is part of a broader effort to minimize cash transactions within the economy, which stands at a high rate of 25% compared to neighboring countries.
The reform package also includes performance-based incentives for tax officers, aiming to enhance their effectiveness and integrity through quarterly assessments. The FBR has stated that it will not introduce new revenue measures to meet the fiscal year’s budget target of PKR 12.97 trillion, focusing instead on closing existing loopholes and enhancing income declaration and tax compliance.