Income Tax Ordinance: FBR drafting new law to end categories of ‘late-filers’, ‘non-filers’

ISLAMABAD: The Federal Board of Revenue (FBR) is drafting a new law to end the categories of “late-filers” and “non-filers” from the Income Tax Ordinance 2001.

Sources told Business Recorder that the draft bill is under preparation to end both the concepts of non-filers and late-filers. The category of “late-filer”, introduced through Finance Act 2024, has already been challenged in Lahore High Court.

Everyone has to justify his sources of income for carrying out financial transactions like purchase of properties and vehicles. In this regard, different monetary limits and thresholds would be proposed in the new law for explaining sources of income.

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Under the proposed law, if a person is filer and able to justify his sources of income, his family including wife (non-filer), mother/father (non-filer), son-age below 25 years (non-filer) and unmarried/divorced/widow daughter would not be required to file return for carrying out financial transaction. In this family tree, the filer has to give sources of income before carrying out financial transactions of his family.

Sources said that a number of transactions of general public would be covered under the new law to make things easier for masses. For example, people can buy motorcycles and old cars up to 1300cc, but have to declare sources for purchasing vehicles above 1300cc. The FBR may allow property transactions up to Rs 10 million without any restriction.

For example, a taxpayer has Rs 100 cash in hand. He can purchase upto Rs 130 without any question of additional Rs 30 from the tax department.

But anyone can conduct huge property transactions involving billions by specifying market value of this property and resources.

The FBR will introduce a mobile app for the general public for declaration of resources which would be acceptable to the tax department. The taxpayer would not be required to go to concerned Commissioner for taking any certificate of exemption, but only fill “sources” column in mobile app, sources said.

Under the proposed law, FBR would establish disincentives for non-compliant taxpayers, starting with registration and linking the availability of facilities such as investments and the creation of bank accounts to the filing of tax returns. There will be no monetary transactions, and the source of funds will have to be established through various digital interventions.

The FBR will provide information to all banks based on individuals’ declared incomes in tax returns and establish a specific limit; any financing transactions that exceed this threshold will be reported to the FBR. This system is expected to be implemented in coming months.

Copyright Business Recorder, 2024