Karachi, December 21, 2024 – The Government of Pakistan has introduced the concept of “eligible persons” for conducting financial transactions in the country. This proposal is part of the Tax Laws (Amendment) Bill, 2024, aiming to streamline financial activity and ensure compliance with tax regulations.
According to an analysis by Tola Associates and Tola & Tola, the Bill proposes a new Section 114C to the Income Tax Ordinance, 2001, defining “eligible persons” authorized to engage in financial transactions.
Under Section 114C(5)(b), an eligible person is described as someone who has filed an income tax return for the tax year immediately preceding the transaction year. Additionally, the person must have sufficient financial resources reflected in a wealth statement (for individuals) or financial statements (for companies or associations of persons) to justify the transaction.
In the case of individuals, the definition of an eligible person also extends to immediate family members, as outlined in the proviso to Section 114C. For example, if an individual intends to purchase immovable property in the Tax Year 2025, they must have filed their income tax return for Tax Year 2024 to qualify as an eligible person.
Conversely, the law defines an “ineligible person” under Section 114C(5)(d) as anyone who does not meet the eligibility criteria. This distinction aims to ensure financial transactions are conducted only by those compliant with tax regulations, minimizing potential misuse and tax evasion.
This initiative is part of broader reforms to enhance financial transparency and improve tax collection in Pakistan. By introducing the eligible person requirement, the government seeks to encourage tax compliance and accountability in financial dealings.
Experts believe this amendment could significantly impact individuals and businesses by making it mandatory for them to maintain up-to-date tax records and sufficient financial disclosures. While some may view the policy as an added burden, it is expected to contribute to greater financial discipline and a more robust tax system in the country.
As the Tax Laws (Amendment) Bill, 2024, progresses, the government will likely provide further clarity on its implementation and potential implications for taxpayers and businesses alike.