FBR to share data with banks
to scrutinize financial transactions
The Federal Board of Revenue (FBR)
will now share income tax return data with banks as part of the newly
introduced Tax Laws (Amendment) Bill 2024. This move aims to improve the
scrutiny of financial transactions by cross-checking banking data with tax
return information.
The bill, presented to the National
Assembly, introduces classifications for "eligible" and
"ineligible" individuals. Those deemed ineligible, such as
non-filers, will face restrictions on various economic activities. These
individuals will be prohibited from purchasing motor vehicles, buying or
selling real estate, engaging in securities transactions, and will be barred
from opening new bank accounts or accessing existing ones.
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Under the new law, the FBR can share
details such as income, turnover, bank account numbers, wealth, and financial
statements from tax returns with financial institutions, specifically regarding
high-risk individuals. Banks are required to report discrepancies between the
banking data and the FBR’s algorithms, helping identify account holders who do
not meet the eligibility criteria.
An "eligible person" is
someone who has filed an income tax return for the previous year and has
sufficient resources, as evidenced by their wealth or financial statements. In
contrast, an "ineligible person" is anyone who fails to meet these
requirements.
The Commissioner Inland Revenue will
have the authority to instruct banks to restrict account operations for
individuals who are not registered with the sales tax department. Additionally,
property registration authorities will be directed to block property transfers
for individuals not registered for sales tax.
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The bill also imposes limitations on
various economic activities for ineligible individuals. They will be prohibited
from applying for vehicle registrations or transferring real estate exceeding
certain values. Banks will be restricted from opening or maintaining accounts
for ineligible persons, with exceptions made only for basic accounts.
Cash withdrawals will also be
limited for ineligible individuals, based on criteria set by the FBR, though
exceptions will be allowed for specific vehicle purchases, such as motorcycles
and tractors.
Source: Business Recorder