The Standing Committee on Finance and Revenue unanimously approved the Tax Laws Amendment Bill 2024 on Thursday, introducing significant measures to curb tax evasion and regulate extravagant spending. The bill grants the Federal Board of Revenue (FBR) the authority to pre-audit all sales and scrutinize purchases that exceed an individual’s declared income.
Focus on Top 5% Earners
FBR Chairman Rashid Langrial, while briefing the committee, emphasized that the amendments primarily target the top 5% of income earners, who often evade taxes despite their substantial wealth. He assured that 95% of the population would remain unaffected by the proposed changes.
The amendments aim to address under-filing by requiring taxpayers to justify their declared income against their assets and lifestyle. For example, purchases exceeding 130% of a filer’s declared income will now require the declaration of additional income or resources in tax returns. This means individuals can only make purchases worth up to 130% of their declared wealth without additional scrutiny.
Stricter Scrutiny on Lavish Lifestyles
The bill introduces stringent measures to ensure that high-value purchases, such as vehicles, properties, and investments in securities, align with declared incomes. Filers will now be required to declare their sources of income before making such purchases. Additionally, pre-audit mechanisms for high-value sales, including gold and foreign currency, were approved to prevent tax evasion.
The committee also mandated that cigarettes and beverages cannot be sold without tax stamps, stickers, or barcodes, ensuring compliance with tax regulations in these industries.
Boosting Tax-to-GDP Ratio
Finance Minister Muhammad Aurangzeb highlighted the need to increase Pakistan’s tax-to-GDP ratio to 13.5% within three years. He stated that provinces would contribute an additional 3% to achieve this target, which is critical for improving the country’s fiscal health.
Additional Recommendations
The committee also recommended allowing pensioners and non-filers to open Asaan bank accounts, a move aimed at promoting financial inclusion and easing banking access for underserved segments of the population.
The Tax Laws Amendment Bill 2024 is expected to enhance tax compliance, reduce evasion, and ensure that high-income earners contribute their fair share to the national economy.
