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The federal government has unveiled wide-ranging tax compliance reforms in Finance Bill 2025, proposing tougher penalties and stricter enforcement to boost documentation and curb tax evasion, particularly in digitally active and under-taxed sectors.
As part of the new tax compliance reforms in Finance Bill 2025, a tenfold hike has been suggested in penalties for late submission of withholding tax statements — increasing the fine from Rs5,000 to Rs50,000. The aim is to compel timely filings and reduce revenue losses caused by delays.
Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial emphasized that enforcement, not new taxation, is the most practical path to enhanced revenue collection. The bill also proposes stringent fines for online marketplaces enabling non-resident, unregistered vendors to sell goods or services without proper registration under the Sales Tax Act or Income Tax Ordinance.
These platforms, along with courier services, will face penalties of Rs500,000 for a first violation and Rs1 million for repeated defaults. Similarly, payment gateways, courier services, and banks that fail to deduct or deposit the required tax when processing payments to sellers will face a penalty of 100% of the due tax amount in cases involving digitally ordered goods and services.
Courier Services and Banks Become Withholding Agents
To streamline compliance, the government has made courier services and banks responsible as withholding agents. These agents must deduct and submit taxes to the FBR before forwarding the remaining amount to sellers.
The Finance Bill 2025 also proposes shifting the authority for determining immovable property values from the FBR to the federal government. Until these values are officially notified, no property transaction restrictions will apply.
Further easing certain banking limitations, the bill extends exemptions to pensioner accounts alongside Aasan accounts. The definition of “eligible person” is broadened to include those who file investment source statements with adequate justification for a transaction.
Additionally, the definition of “immediate family” now includes financially dependent adult children above 25 years, while removing “special child” from the list. The bill also expands “sufficient resources” to include cash (local/foreign), market value of gold, stocks, and bonds — all of which can be declared in wealth or investment statements.
For companies and AOPs, sufficient resources will now reflect assets reported in the latest financial statements. A new proviso clarifies that when an asset is acquired through the exchange of previously declared capital assets, the disposed asset’s value will be included in cash-equivalent assets up to its stated worth in the agreement.
These comprehensive measures underline the government’s commitment to tightening fiscal oversight and ensuring broader compliance under the tax compliance reforms in Finance Bill 2025.
