Islamabad:
The federal budget for fiscal year 2025-26 has proposed a significant expansion of the powers of the Federal Income Board (FBR), including the introduction of strict application measures aimed at hardening the tax regime and curbing financial irregularities.
According to official sources, the FBR has been granted powers similar to those of an officer of the house of the station (SHO), which allows it to carry out inspections of accounting and audit signatures colleagues involved in the preparation of tax declarations on income if discrepancies are suspected in taxpayers’ statements.
This will give FBR officers the ability to directly supervise these companies to ensure compliance with tax laws.
Those who intend to buy vehicles or real estate must demonstrate that the declared value of the asset is within 130% of their income declared in the tax declaration of the previous year.
Buyers must submit a formal request to the FBR confirming the availability of funds, either in their own name or that of their spouses or children, and which were duly declared in their statements of wealth.
The proposed legislation also authorizes the FBR to share taxpayers’ data with commercial banks, which allows them to verify the deposit and investment activity with declared income. In cases where financial transactions are not reconciled with tax statements, banks will be obliged to inform these clients to the FBR, which will be empowered to initiate compliance actions.
In addition, the FBR now will have the authority to close unregistered bank accounts. Previously, it could only freeze accounts for tax recovery purposes. According to the new law, an unregistered bank account will not be allowed to operate, and the banks must comply with the FBR directives in this regard.
The amendments proposed to section 58C of the Income Tax Ordinance allow even more than the FBR access to the offices of fiscal advisors and companies responsible for submitting statements where discrepancies are suspected. The intention is to verify the base on which financial records and yields have been prepared.
The definition of sales tax fraud has also been expanded. According to the proposed changes, any person or entity found to help or incite tax fraud will be subject to legal prosecution.
The bill also proposes that the FBR be granted the authority to physically monitor the movement of goods, including sugar and other products, through an improved load monitoring system. This will ensure that products such as sugar are carried out accurately and comply with tax regulations.
To a extent that it is likely to affect buyers online, the Finance Law draft seeks to impose a 18% sales tax on all electronic commerce transactions.
Payment collection entities, such as messaging companies and banks that process credit card and debit payments, will be designated as retention agents, responsible for collecting and depositing the tax at the time of delivery. This will significantly increase the cost of online purchases for consumers.
The finance bill also requires digital and social networks platforms, including YouTube, Facebook, Tiktok, Instagram, X and independent sites, to send advertising income details to the FBR each quarter.
The platforms that do not meet a strict action, including the blocking of money transfer through the State Bank of Pakistan (SBP).
