Govt to introduce major changes in tax laws through Finance Bill 2024-25

The federal government is expected to introduce major changes in the tax laws through the Finance Bill 2024-25, aiming to increase the cost of financial transactions for non-filers of income tax returns and introduce enforcement measures worth Rs 300-400 billion in 2024-25.

BR reported that the Finance Bill 2024 would also enhance the powers of the Directorate General of Digital Invoicing, Federal Board of Revenue (FBR), to document the supply chains of all major businesses. The FBR has drafted a set of budget proposals to document the economy for the next fiscal year.

To eliminate discrimination, there is a possibility that the FBR may introduce a single turnover-based registration threshold for all businesses. 

The government may also implement an overseas vendor registration regime, requiring foreign suppliers of goods to consumers in Pakistan to register for and collect federal sales tax.

The government may impose a duty on input tax claimants to ensure they are not participating in Missing Trader Fraud arrangements and to report suspicious transactions, with penalties or prosecution as consequences.

The FBR has proposed uniform changes in the Sales Tax Act, Income Tax Ordinance, and Federal Excise Act including withholding taxes for non-filers, specifically on cash withdrawals from banks, from 0.6% to 0.9% to generate additional revenue of Rs 15-20 billion during 2024-25. 

Supplies to unregistered persons would be made more costly for the business community as part of the government’s policy to penalise non-filers of income tax returns.