Government Mulls Including Tax Law Amendments in Next Finance Bill

The government is considering incorporating the Tax Laws (Amendment) Bill, 2024 into the upcoming Finance Bill (2025-26) to place limitations on financial activities for individuals who do not file tax returns, sources reveal.

The Federal Board of Revenue (FBR) has yet to implement the required technological updates to its digital infrastructure for the effective enforcement of Section 114C of the Tax Laws (Amendment) Bill, 2024, which pertains to restrictions on financial transactions for non-filers.

FBR Chairman Rashid Mahmood Langrial had requested a two-month extension from the committee to facilitate the development of necessary technological tools for implementing Section 114C, which addresses limitations on certain individuals’ economic activities. In February 2025, the National Assembly Standing Committee on Finance postponed the implementation of this section, pending the FBR’s required updates to its online systems.

Amended Tax Laws to Tighten Grip on Non-Filers

Former Minister of State for Finance, Ali Pervaiz Malik, had assured the committee that a technological solution would be presented for implementing the new Section 114C of the Tax Laws (Amendment) Bill, 2024.

He emphasized that the postponement of the new section, which restricts the transfer of immovable property, would not impede the FBR’s ongoing efforts to document affluent individuals and those who do not file income tax returns. He stated that non-filers were previously utilized as revenue generators without prosecution, a practice that is unsustainable. He added, the FBR possesses comprehensive data on all immovable property transactions and will continue to take action against non-filers.

The committee suggested that the FBR demonstrate the updated online system before further considering Section 114C of the Tax Laws (Amendment) Bill, 2024.

The FBR has pledged to provide this demonstration to the committee, with one option being the reconsideration of this section during the budget process in June 2025.

A sub-committee suggested that during this period, the FBR should concentrate on making the necessary technological changes, guaranteeing optimal user-friendliness and convenience for taxpayers, and addressing any unintended impacts. The committee also instructed the National Database and Registration Authority (Nadra), provincial excise departments, and provincial land authorities to assist the FBR in creating the new system, according to the FBR chairman.

The FBR chairman clarified that transactions conducted by non-resident individuals or public companies would not be subject to the Tax Laws (Amendment) Bill, 2024.

The chair emphasized the necessity for the Revenue Division to revisit Clause (5)(a) to provide greater clarity on the term “cash and equivalent assets.” The Revenue Division was also directed to finalize the updated online system/mobile app and present a demonstration to the committee within two months.