Non Filers to Face Freezing of Bank Accounts

FBR’s Tough Measures

The Federal Board of Revenue (FBR) has unveiled a series of stringent measures aimed at enhancing tax compliance and increasing revenue generation in Pakistan. These measures, approved by Prime Minister Shehbaz Sharif, are part of the FBR’s Indigenous Transformation Plan.

Key Provisions of the Plan

• Account Freezing: The FBR plans to freeze the bank accounts of unregistered manufacturers and wholesalers with turnovers exceeding Rs250 million and retailers with turnovers exceeding Rs100 million.
• Restrictions on Transactions: Non-filers will face restrictions on purchasing cars, property, financial instruments, and opening new bank accounts (except for basic accounts like the Asaan Account).
• Income Declaration: Individuals declaring income above Rs10 million will be exempt from these restrictions, while those declaring less will need to justify their income sources before making significant purchases.
• Digital Invoicing: The FBR will promote digital invoicing to improve tracking of business transactions.
• Notices to Unregistered Entities: Notices will be issued to unregistered businesses, and severe penalties, including account freezing and utility restrictions, will be imposed on non-compliance.
• Reduction of Cash Circulation: The FBR aims to reduce the circulation of cash in Pakistan.
• Performance-Based Incentives: Tax officers will be incentivized based on their integrity and performance.

Target Groups

The primary targets of these measures are:

• Unregistered manufacturers and wholesalers with turnovers exceeding Rs250 million.
• Unregistered retailers with turnovers exceeding Rs100 million.
• Individuals who have not filed their income tax returns.

Eligibility Criteria

To avoid these restrictions, individuals and businesses must:

• File their income tax returns on time.
• Declare accurate income.
• Register with the FBR as required.
• Comply with digital invoicing requirements.

Impact of These Measures

The implementation of these measures could have a significant impact on the Pakistani economy. It is expected to:

• Increase tax revenue.
• Reduce tax evasion.
• Improve the efficiency of the tax system.
• Foster a more equitable distribution of the tax burden.

However, it is also important to note that these measures may have unintended consequences, such as discouraging investment and economic activity. The FBR will need to carefully monitor the implementation of these measures and make adjustments as necessary.