Islamabad’s dual approach: Relaxing purchases for non-filers, tightening financial scrutiny

Islamabad’s crusade against non-filers continues, as additional restrictions have been placed on them. According to reports, commercial banks have been instructed to disclose data regarding transactions that exceed an individual's stated income on their tax return documents.

However, The National Assembly Standing Committee on Finance and Revenue has simultaneously relaxed purchase restrictions on non-filers. Non-filers will now be allowed to purchase cars under 800cc, motorcycles, rickshaws and, most importantly, tractors.

This spells great news for businesses as a greater assortment of their products will now be safe from the drop in demand that government restrictions on non-filers will bring. The protection of unrealised profits could boost business confidence in government policies.

Initially, the Pakistan Stock Exchange (PSX) witnessed a significant slump after the barring of non-filers from trading activities. Islamabad has lifted some of the restrictions on the sale of goods and services to non-filers, which could be an attempt to safeguard businesses from falling sale volumes.

MNA Naveed Qamar chaired a meeting of the committee to review parts of the tax amendment bill. According to reports, the remaining arrangements regarding the review will be complete once the next committee session ends.

The committee expanded the purchase eligibility of non-filers by removing tractors from the list of goods non-filers could not purchase. However, banks will now be required by law to report unusual transactions made by non-filers.

Furthermore, members of the committee requested an explanation of the phrase ‘cash and equivalent assets’ in Clause (5)(a) of the bill. Reports have revealed that the Federal Board of Revenue (FBR) has created a new online system and mobile application. The integration of technology could significantly assist FBR officials in their duties.

In January, the FBR fell short of its revenue target by a colossal 386 billion rupees. According to reports, the shortfall could be attributed to a fall in tax receipts. The use of technology could significantly streamline FBR processes, allowing officials to possibly achieve the revenue target for fiscal year (FY) 2024-25, which currently sits at an ambitious 12.9 trillion rupees.

MNA Bilal Azhar claimed that the developments could improve tax frameworks across Pakistan, allowing for increased collection levels. This spells great news for lawmakers in Islamabad as higher revenue levels could allow the federal government to deviate from the prolonged contractionary fiscal policy measures in the next federal budget.

Reports reveal that a subcommittee on finance and revenue suggested that Islamabad set price thresholds for transactions instead of the FBR. This would ensure that normal citizens do not face financially discriminatory treatment from authorities reserved for non-filers.