Islamabad: The federal government has proposed a wide range of tax, compliance and digital enforcement measures in the Finance Bill, with the new provisions expected to take effect from July 1, subject to parliamentary approval.
Among the key proposals is a 15-year sales tax exemption for Pakistan International Airlines (PIA) on the purchase of aircraft. The government has also suggested reducing the sales tax on children’s stationery items, including pencils, pens and sharpeners, to 10 percent.
The Finance Bill introduces significant changes to vehicle taxation. A one-time fixed tax of Rs10,000 has been proposed for vehicles up to 1000cc in federal areas. Token tax rates for older and newer vehicles in the same category are also set to increase under the revised structure.
For vehicles between 1001cc and 1300cc, token tax will be calculated at 0.3 percent of the invoice value, while updated valuation rules will apply to higher engine-capacity categories.
The government has also approved amendments to Section 182 of the Income Tax Ordinance 2001. Under the proposed framework, tax liability could be determined based on current taxable income or the highest tax assessed during the previous three years, whichever amount is greater.
To strengthen tax compliance, stricter penalties have been proposed for individuals and businesses that fail to respond to notices issued by the Federal Board of Revenue (FBR). First-time violations may result in a fine of Rs1 million, while repeated non-compliance could attract penalties of up to Rs2 million.
The bill also focuses heavily on digital monitoring and enforcement. Businesses will be required to install electronic tax monitoring systems, with failure to comply potentially resulting in fines and legal action. Tampering with FBR monitoring infrastructure could lead to imprisonment of up to five years.
To encourage compliance, the FBR plans to offer rebates of up to Rs30 million for businesses that install approved monitoring systems.
In addition, electronic filing of income tax returns through the FBR’s Iris platform will become mandatory. Companies will also be required to submit financial statements in machine-readable formats, while a new algorithm-based tax settlement system will allow eligible taxpayers to revise returns without prior approval from tax authorities.