Govt Targets Non-Filers in Finance Bill 2025-26

The federal government is set to include stricter measures against income tax non-filers in the Finance Bill 2025-26 by incorporating the Tax Laws (Amendment) Bill, 2024. These changes are expected to impose tighter restrictions on economic transactions for individuals who do not file their income tax returns, according to Business Recorder.

However, the Federal Board of Revenue (FBR) has not yet completed the technological upgrades required to enforce Section 114C, the provision detailing these restrictions. FBR Chairman Rashid Mahmood Langrial previously requested a two-month extension from the National Assembly Standing Committee on Finance to develop the necessary digital infrastructure.

In February 2025, the committee agreed to defer implementation of Section 114C until the FBR’s systems are ready. During discussions, former Minister of State for Finance, Ali Pervaiz Malik, emphasized the importance of documenting wealthy individuals and non-filers. He criticized the long-standing trend of relying on non-filers for revenue without any prosecution, calling for a systemic change.

The FBR, which already has access to data on immovable property transactions, will continue its crackdown on non-filers. The committee has asked the FBR to demonstrate the updated online system before any further decisions on Section 114C are made. The demonstration is expected as part of the June 2025 budget process.

Efforts are underway to ensure the system is user-friendly and avoids unintended disruptions. The committee has also directed NADRA, provincial excise departments, and land authorities to support the FBR in building the new infrastructure.

Chairman Langrial clarified that the new restrictions would not apply to non-resident individuals or public companies. He urged the Revenue Division to finalize the system and present it to the committee within the next two months.