The National Assembly Standing Committee on Finance is set to deliberate on the highly anticipated “Tax Laws (Amendment) Bill, 2024” on Tuesday.
This proposed legislation aims to enforce stricter regulations on non-filers, with significant implications for property transactions, vehicle registrations, and stock purchases.
These measures aim to enhance tax compliance and widen the tax net by discouraging economic activities among non-registered individuals.
Prohibition on Economic Transactions for Non-Filers
Under the provisions of the Tax Laws (Amendment) Bill, 2024, non-filers will face severe restrictions on their financial activities, including:
- Vehicle Registrations: Non-filers will no longer be allowed to purchase, book, or register vehicles exceeding 800cc.
- Property Acquisitions: Limits will be placed on acquiring properties beyond a specified value.
- Stock Market Transactions: Restrictions will apply to non-filers seeking to invest in stocks beyond a designated threshold.
Gradual Changes to Withholding Tax Regime
While the government hasthe need to adjust withholding tax (WHT) rates, the changes will be implemented gradually.
Officials clarified that the higher WHT rates for non-filers will not be abolished immediately after the passage of the bill. Instead, these adjustments are expected to take effect in the 2025-26 federal budget.
Tax experts, however, have raised concerns about the potential revenue shortfall, as withholding taxes contribute approximately 70% of the total direct tax collection. The gradual withdrawal of higher WHT rates requires careful planning to maintain fiscal stability.
Prominent stock brokers have urged the government, particularly Finance Minister Aurangzeb, to engage in broader consultations regarding the Tax Laws (Amendment) Act.
Bank Account and Property Restrictions
The bill introduces sweeping powers for financial oversight and enforcement. Notable provisions include:
- Bank Account Operations: Non-filers will be restricted from opening bank accounts, and the number of allowable transactions will be limited.
- Property Seizures: Authorities will have the power to seize properties of non-registered individuals engaged in business activities.
- Motorcycles, Rickshaws, and Tractors: Non-filers will still be permitted to purchase these vehicles.
- Family Exemptions: Immediate family members of registered taxpayers, including spouses and children up to 25 years old, will be considered filers.
- Notification-Driven Implementation: Restrictions on transactions and account operations will take effect only after official notifications.
