New Tax Law Amendment Bill Approved: FBR to Pre-Audit Sales, Restrict Lavish Purchases Exceeding Declared Income

The Standing Committee on Finance and Revenue on Thursday unanimously approved the Tax Laws Amendment Bill 2024 which now allows the Federal Board of Revenue (FBR) to pre-audit all sales, and restrict lavish purchases if they exceed the concerned individual’s declared income. Chairman FBR Rashid Langrial briefed the committee that 95 percent of the population will remain unaffected by the proposed changes, as the focus is on the top 5 percent of income earners who make a lot but evade taxes. The amendments aim to curb under-filing by requiring filers to justify their declared income against their assets and lifestyle. For instance, purchases exceeding 130 percent of declared income will necessitate the declaration of additional income or resources in tax returns. This means that filers can purchase an item or property worth 130 percent of their declared wealth. Lavish lifestyles and substantial assets inconsistent with declared incomes will face stringent scrutiny. Filers must now declare sources of income before making major purchases such as vehicles, properties, or investments in securities. Additionally, pre-audit mechanisms for high-value sales, including gold and foreign currency, were also approved by the committee. Meanwhile, cigarettes and beverages won’t be sold without tax stamps, stickers, or barcodes. Finance Minister Muhammad Aurangzeb informed the committee that there is a need to boost Pakistan’s tax-to-GDP ratio to 13.5 percent within three years and provinces will contribute the additional 3 percent. The committee also recommended allowing pensioners and non-filers to open Asaan bank accounts.