Karachi, December 18, 2024 – In a development aimed at tightening tax compliance, the federal government has proposed a key amendment to the Sales Tax Act of 1990. The government tabled the Tax Laws (Amendment) Bill, 2024 in the National Assembly on Wednesday, which introduces Section 14AC to the Sales Tax Act. The proposed section grants the Commissioner the authority to bar the operations of bank accounts for individuals or entities that fail to register for tax purposes.
According to the newly proposed Section 14AC, sub-section (1) empowers the Commissioner to direct banking companies, scheduled banks, and other financial institutions to restrict the operations of the bank accounts of any person who fails to obtain registration under the Sales Tax Act. This provision marks a significant step in enforcing tax compliance by directly affecting the financial operations of non-compliant individuals or businesses.
Sub-section (2) outlines the procedure for lifting the restrictions. Once the individual or business becomes registered under the Sales Tax Act, the Commissioner is required to issue an order for the removal of the bar on the bank account. This order must be communicated within two working days, ensuring a relatively swift process for those who comply with the registration requirements.
Sub-section (3) provides a mechanism for individuals or businesses that are aggrieved by the Commissioner’s decision. If a person disagrees with the order to bar their bank account, they may file an appeal with the Chief Commissioner Inland Revenue within thirty days from the receipt of the decision. This appeals process allows for transparency and a fair review of the decisions made under this new provision.
Finally, sub-section (4) states that the provisions of Section 14AC will come into effect from a date to be determined by the Board, which will issue a notification in the official Gazette to confirm the commencement of this measure.
This amendment aims to strengthen tax enforcement by making it more difficult for businesses or individuals to operate without proper registration under the Sales Tax Act. By restricting access to essential financial services such as bank accounts, the government hopes to increase tax compliance and broaden the tax base, thereby boosting revenue collection.