Islamabad:
The federal budget for the financial year 2025-26 has proposed a significant expansion of the Federal Board of Revenue (FBR), including the introduction of strict enforcement measures aimed at tightening the tax regime and limiting financial irregularities.
According to official sources, FBR has been given powers similar to those from a Station House Manager (SHO), enabling it to carry out inspections of chartered accounting and audit firms involved in the preparation of tax returns if there are suspected discrepancies in taxpayers’ statements.
This will give FBR officers the opportunity to directly oversee these companies to ensure compliance with tax law.
Those intended to buy vehicles or real estate will be required to prove that the asset’s declared value is within 130% of their income as declared in the previous year’s tax return.
Buyers must submit a formal application to the FBR confirming the availability of funds – either in their own name or their spouses or children – and that they were duly declared in their wealth statements.
The proposed legislation also authorizes FBR to share taxpayers’ data with commercial banks, enabling them to cross-check deposit and investment activity with declared income. In cases where financial transactions do not reconcile with tax returns, banks will be obliged to report such customers to FBR, which will be authorized to initiate enforcement measures.
In addition, FBR will now have authority to close unregistered bank accounts. Previously, it could only freeze accounts for tax recovery purposes. According to the new law, it is not allowed to operate an unregistered bank account and banks will be obliged to comply with FBR directives in this regard.
The proposed amendments to section 58C of the Income Tax Regulation authorize further FBR to access the offices of tax advisers and companies responsible for the submission of returns where there is suspected discrepancies. The intention is to verify the basis on which financial items and returns have been prepared.
The definition of turnover tax fraud has also been expanded. According to the proposed changes, any person or entity who found that helping or lap in tax fraud will be subject to legal prosecution.
The Bill also proposes that the FBR be allocated to the authority to physically monitor the movement of goods, including sugar and other raw materials, through an improved cargo tracking system. This will ensure that raw materials such as sugar are traced accurately and comply with the tax rules.
In a step that is likely to affect online shoppers, the financial bill is trying to introduce a VAT of 18% on all e-commerce transactions.
Payment collection units – such as courier companies and banks that process credit and debit card payments – are appointed as detention agents responsible for charging and depositing the tax at the time of delivery. This will significantly increase the cost of online shopping for consumers.
The financial proposal also requires digital and social media platforms, including YouTube, Facebook, Tiktok, Instagram, X and Freelancing sites, to submit advertising information to FBR every quarter.
Platforms that do not comply will be subjected to strict action, including blocking the transfer of money through the State Bank of Pakistan (SBP).
