The savings and current bank accounts of non-filers will henceforth be blocked by the Federal Board of Revenue (FBR).
According to sources, the Senate Standing Committee on Finance and Revenue accepted the prohibition clause to block non-filers’ current and savings accounts on Friday during its consideration of the Tax Laws Amendment Bill 2024.
According to sources, banks won’t open or keep an existing savings or current account, or any other securities account in an investor’s portfolio. Any cash withdrawals from a person’s bank account that exceed a specific threshold will be blocked by FBR.
It has been decided that banks and the tax system would work together to develop a system that restricts banking activities by comparing people’ claimed income to CNICs. The FBR intends to take action against those individuals whose transactions do not match their reported income.
Additionally, additional income or resources must be stated on tax returns for purchases that exceed 130 percent of declared income. Accordingly, taxpayers are able to buy a property or thing valued at 130 percent of their stated wealth.
Before making significant purchases like cars, real estate, or stocks transactions, filers are now required to disclose their income sources. The committee also approved pre-audit procedures for high-value sales, such as those involving gold and foreign currencies.
In the meanwhile, tax stamps, stickers, or barcodes are required for the sale of cigarettes and alcohol.
Blocking accounts could have significant implications for non-filers, potentially disrupting their financial activities and encouraging them to comply with tax regulations.
Blocking the accounts of non-filers could have several impacts on small businesses in Pakistan:
- Cash Flow Disruptions:
Small businesses often rely on their current and savings accounts for daily operations. Blocking these accounts could disrupt cash flow, making it difficult to pay suppliers, employees, and other operational expenses.
- Increased Compliance Costs:
Small businesses may need to invest more time and resources into ensuring tax compliance to avoid account blockages. This could include hiring accountants or tax consultants, which can be costly.
- Operational Challenges:
With accounts blocked, businesses might face challenges in conducting transactions, leading to delays in business operations and potential loss of customers.
- Encouragement to Formalize:
On the positive side, this measure could encourage small businesses to formalize their operations and comply with tax regulations, potentially leading to long-term benefits such as access to credit and government support.
Overall, while the measure aims to improve tax compliance, it could pose significant challenges for small businesses in the short term.