Taxmen get more powers to target unregistered taxpayers

ISLAMABAD: The government, through the Finance Bill 2025-26, has proposed to grant extensive discretionary powers to tax officers and Commissioners to restrict the operations of bank accounts or transfer of immovable property for any individual who fails to register under the Federal Sales Tax Act.

Arshad Shehzad, advocate of the Supreme Court, explained that the Finance Bill 2025-2026 intends to add new Sections 14AC, 14AD, and 14AE to the Act in order to promote sales tax registration and enhance economic documentation.

According to the explanatory notes from the board, these provisions aim to strengthen enforcement measures, including restrictions on bank account operations, the transfer of immovable property, sealing of business premises, property seizure, and the appointment of a receiver to compel compliance from unregistered individuals.

While this initiative appears to be directed at strengthening enforcement, it also bestows excessive discretionary powers upon tax officers.

Shehzad argues that a comprehensive mechanism already exists under the law for compulsory registration, penal actions, and the recovery of sales tax, including default surcharges, penalties, and other consequences for non-registration.

These additional measures would only grant more discretionary authority to tax officials and may lead to unnecessary conflicts.

Shehzad emphasises that the implementation and enforcement of existing laws are far more important than introducing harsh, coercive measures repeatedly.

Shehzad suggests that the government should focus on building confidence within the business community, utilising the database of unregistered individuals in a pragmatic manner to integrate new taxpayers into the tax system without creating an atmosphere of harassment.

Any measure that create a negative perception among businesses could hinder growth and lead to capital flight; therefore, all such measures that threaten the confidence of businesses and trade should be avoided, he concluded.