Islamabad, July 9, 2025 — In a dramatic turn of events, the much-publicized law to impose economic restrictions on ineligible persons has been quietly altered through a seemingly subtle clause—raising serious concerns over the intent and timing of its enforcement.
(more…)Tag: non-filers
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NA Committee Delays Economic Restrictions on Tax Non-Filers
Islamabad, February 12, 2025 – The National Assembly Standing Committee on Finance and Revenue has deferred the implementation of Section 114C of the Tax Laws (Amendment) Bill, 2024, which restricts economic transactions of non-filers.
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Non-Filers Drive 85% Spike in Car Buying
Karachi, February 11, 2025 – A massive increase of 85% was recorded in car buying during the month of January 2025, driven by fears of impending restrictions on non-filers of income tax returns.
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Tax Bill Proposes Restrictions on Various Transactions
The Tax Laws (Amendment) Bill, 2024 introduces a series of proposed restrictions targeting non-compliant individuals and entities under Section 114C(1) of the Income Tax Ordinance, 2001. These amendments are aimed at curbing tax evasion and improving tax compliance by restricting certain transactions for individuals and businesses that fail to meet tax obligations. The bill, as outlined by Tola Associates and Tola & Tola, specifies several key restrictions that will come into effect once notifications are issued by the Federal Board of Revenue (FBR).
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FBR Initiates Disconnection Drive Against Non-Filers
Karachi, January 11, 2024 – In a bold move to bolster tax compliance, the Federal Board of Revenue (FBR) has embarked on the disconnection of phone, gas, and electricity services for individuals who have failed to file their income tax returns.
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FBR Launches Sweeping Crackdown Against Non-Filers by Cutting Mobile Phones and Electricity Connections
Karachi, November 18, 2023 – In a major move to enhance tax compliance, the Federal Board of Revenue (FBR) has initiated a significant crackdown against non-filers of tax returns by employing stringent measures, including the disabling of mobile phone and electricity connections, according to official sources on Saturday.
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Persons not on new ATL to pay 100% additional withholding tax
KARACHI: Persons who have failed to submit their annual income tax returns and declaration of assets for tax year 2019 will pay 100 percent additional withholding tax on certain transactions, sources in Federal Board of Revenue (FBR) said on Monday.
They said that those taxpayers availing the benefit of reduced rate of withholding tax on the basis of returns filed for tax year 2018 would not more eligible.
The FBR issued new Active Taxpayers List (ATL) for tax year 2019 including names of those return filers who filed their returns up to February 29, 2020.
The new ATL included name of 2.53 million taxpayers who filed their returns for tax year 2019. These taxpayers were salaried persons, business individuals, Association of Persons (AOPs) and companies.
The FBR had extended the last date for filing income tax returns and declaration of assets up to February 28, 2020.
The sources said that through Finance Act, 2019 a new 10th Schedule to Income Tax Ordinance, 2001 was introduced under which the FBR imposed 100 percent additional withholding tax on those persons whose name were not on the ATL.
Previously, the law provides for the concept of a non-filer and stipulates higher withholding rates for the same which were adjustable at the time of filing of income tax return.
This tax regime has created a misconception that a non-filer can go scot free by choosing not to file income tax return.
The measure was meant to increase the number of filers, however over time the focus shifted to raising additional revenue only.
The measure had not achieved the desired results as the regime did not provide for any legal framework to ensure filing of return by such non filers.
In order to remove the aforesaid misconception, the concept and the term of “non-filer” was abolished from the statute, wherever occurring.
In its stead a separate Schedule is being introduced to specifically provide a legal framework for punitive measures for persons not appearing on ATL and to ensure filing of return by such persons.
The main attributes of this scheme are as under:-
— Persons whose names are not appearing on the ATL will be subjected to hundred percent increased rate of tax.
— The withholding agents will clearly specify the names, CNIC or any other identification of such persons in the withholding statement so that legal provisions to enforce return can come into effect.
— Where a withholding agent is of the opinion that hundred percent increased tax is not required to be collected on the basis that the person was not required to file return, the withholding agent shall furnish an intimation to the Commissioner setting out the basis on which the person is not required to file return.
The Commissioner shall accept or reject the contention on the basis of existing law. In case the Commissioner fails to respond within thirty days, permission shall be deemed to be granted to not deduct tax at hundred percent increased rate o Where the person’s tax has been deducted or collected at hundred percent increased rate and the person fails to file return of income for the year for which tax was deducted, the Commissioner shall make a provisional assessment within sixty days of the due date for filing of return by imputing income so that tax on imputed income is equal to the hundred percent increased tax deducted or collected from such person and the imputed income shall be treated as concealed income.
— The provisional assessment shall be of no effect if the person files return within forty five days of completion of provisional assessment and the provisions of the Ordinance shall apply accordingly. Where return is not filed within forty five days of provisional assessment, it shall be treated as final assessment and the Commissioner shall initiate penalty proceedings for concealment of income.
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SBP relaxes tax non-filer condition
KARACHI: The State Bank of Pakistan (SBP) on Wednesday relaxed non-filer condition for depositing into to foreign currency accounts in order to facilitate declarants of tax amnesty scheme 2019.
Referring Assets Declaration Ordinance, 2019 (ADO), the central bank said that the Ordinance had been promulgated with a view to provide for voluntary declaration of undisclosed assets, sales and expenditures, for the purposes of allowing the non-documented economy’s inclusion in the taxation system and economic revival and growth by encouraging a tax compliant economy/ culture.
In terms of Section 8 of the ADO, the declaration made shall be valid if the foreign currency held in Pakistan declared under Section 3 is deposited into declarant’s own foreign currency bank account at the time of declaration and is retained in such account till 30th June, 2019.
“It is clarified that notwithstanding any instructions to the contrary contained in the Foreign Exchange Manual, a declarant, including a non-filer can deposit foreign currency in cash into his/her bank account under the ADO.”
Similarly, the provision of Foreign Exchange Manual, Chapter 6, para 1(vi) regarding deposit of foreign currency notes in foreign currency accounts exceeding USD 10,000/- (or equivalent in other currencies) in a single day, shall not be applicable to such deposits made under the ADO.
However, the banks while accepting such deposits under the ADO shall obtain a copy of the declaration filed with the Federal Board of Revenue (FBR) by the declarant and accept the deposit only if the amount being deposited is equivalent to the amount declared in the declaration filed with FBR.
The banks shall ensure the confidentiality and secrecy of the information contained in the declaration submitted to them by declarants along-with deposit request.
The banks shall submit to the State Bank of Pakistan (SBP) a statement as annexed hereto, within 7 (seven) days of close of the scheme.
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No provision for non-filers to purchase immovable property, motor vehicle: FBR
ISLAMABAD: Federal Board of Revenue (FBR) has said that no such provision was proposed through Finance Bill 2019 to allow non-filers to purchase immovable property or motor vehicles.
In a statement on Wednesday, the FBR strongly refuted the news appearing in some sections of press which states that the new Finance Bill has allowed the non-filers to purchase immovable property or cars.
The actual position is that the whole system of recognizing a non filer as a legal entity has been done away with in the new Finance Bill.
FBR has explained that under Income Tax Ordinance, every person earning taxable income ought to file his Income Tax Returns.
In case of failure of filing of Returns by persons involved in significant monetary transactions, a complete mechanism has been provided in the newly inserted 10th Schedule.
such persons will not only have to pay 100 percent more tax at Withholding stage but will also be automatically assessed to tax and his imputable income will be treated as concealed income liable to penalties and prosecution.
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Foreign Remittances: Non-filers get exemption on cash withdrawal
KARACHI: The government has granted exemption from deduction of income tax on cash withdrawal by non-filers from Pak Rupee bank accounts, which have been opened for receiving foreign remittances.
Through Finance Supplementary (Second Amendment) Act, 2019 a clause 101A has been inserted to Second Schedule of Income Tax Ordinance, 2001.
It said: “The provisions of Section 231A shall not apply to Pak Rupee account if the deposits in the account are made solely from foreign remittances credited directly into such account.”
The Section 231A is related to deduction of withholding tax on cash withdrawal from banking system.
The government through the latest Act already exempted deduction of withholding tax on cash withdrawal by filers of income tax returns.
The instant clause also exempts the non-filers of income tax returns if their bank accounts receive foreign remittances.
Sources in Federal Board of Revenue (FBR) said that the measures have been taken to promote inflows of foreign remittances through normal banking system.
The sources further said that on normal transactions by non-filers a tax rate of 0.6 percent will apply on cash withdrawal of Rs50,000 per day.