The Finance Bill 2024 has proposed stringent measures for shopkeepers and retailers, recommending imprisonment of up to six months for those failing to register with the Federal Board of Revenue (FBR). This proposal aims to enforce compliance and ensure a broader tax base in Pakistan.
According to a commentary on the Budget 2024-25 by experts at KPMG Taseer Hadi & Co., Section 99B of the Income Tax Ordinance, 2001, grants the FBR the authority to specify special procedures for the taxation of retailers, small traders, and shopkeepers. The FBR utilized this authority through SRO 457(I)/2024, issued on March 30, 2024, which outlined a special procedure for the registration and taxation of these groups. The deadline for registration under this SRO was April 30, 2024.
The Finance Bill 2024 proposes that small traders, retailers, and shopkeepers who fail to apply for registration by the specified date will be committing an offense. On conviction, they could face imprisonment for up to six months, a fine, or both. This move is part of a broader strategy to bring more businesses into the formal tax net and improve tax compliance.
Experts also highlighted that the Finance Bill 2024 introduces prosecution for failure to furnish accurate information in income returns. The bill proposes expanding the scope of punishment for incorrect or non-declaration of required particulars and information under the Income Tax Ordinance, 2001. This expansion is achieved by adding a new Section 191A to the ordinance.
Section 191A specifies that any company, including banking companies and associations of persons, that:
• Fails to fully state all relevant particulars or information as specified in the return form, including a declaration of records kept by the taxpayers;
• Furnishes blank or incomplete particulars or information in the return of income; or
• Attaches blank or incomplete annexures, statements, or documents when such items are required to be filed,
shall be committing an offense. On conviction, they could face a fine or imprisonment for a term not exceeding one year, or both.
These measures underscore the government’s commitment to enhancing tax compliance and ensuring accurate reporting of income and financial information. By imposing stricter penalties, the Finance Bill 2024 aims to deter tax evasion and promote a culture of transparency and accountability among businesses.
The proposed changes are expected to have significant implications for retailers, small traders, and larger companies alike. Compliance with these new regulations will be crucial to avoid the severe penalties outlined in the Finance Bill 2024.