The government has begun implementing stringent measures to boost tax revenue under the International Monetary Fund's (IMF) conditions.

The Tax Laws Amendment Bill 2024 proposes the strictest penalties yet to crack down on tax evasion and enforce compliance with tax laws.

Crackdown on non-filers

Under the proposed measures, individuals who fail to file taxes will face severe restrictions. Non-filers will be banned from purchasing property, vehicles, and opening or maintaining bank accounts. They will be banned from opening a current or savings bank account or maintaining an old account. Additionally, they will be prohibited from investing in securities or mutual funds. Those who do not register their businesses will not be able to open bank accounts. 

Non-filers will also not be allowed to book, purchase, and register vehicles. The bill further tightens regulations by banning the transfer, verification or registration of immovable property for non-filers. Moreover, commissioners will be granted the authority to seal businesses and seize movable property of defaulters.

Real-time monitoring, cooperation

To ensure stricter compliance, banks will be required to share data on high-risk individuals with the Federal Board of Revenue (FBR). Property registration authorities and service providers must also cooperate with the FBR by connecting to a computerized system for real-time monitoring, starting in Islamabad.

Tax based on actual income

According to the draft legislation, tax collection from filers will be strictly aligned with their actual income. To aid enforcement, the FBR will have the authority to appoint experts for audits, investigations, legal proceedings, and valuations.

Banking and investment restrictions

Non-filers will face additional restrictions, including a ban on withdrawing funds exceeding a prescribed limit. The new regulations will not apply to purchases of certain small vehicles, such as rickshaws, motorcycles, tractors, and pickups with an engine capacity of 800cc or less.

Easing restrictions for business registration

In a move to encourage compliance, restrictions on businesses will be lifted within two days of completing registration.

The government’s decision to enforce these measures comes as part of its agreement with the IMF to improve tax collection and enhance the country’s financial stability.