New Measures Introduced in Finance Act 2024 to Enhance Tax Compliance in Pakistan

The Finance Act 2024: Pakistan Introduces Stricter Measures to Enhance Tax Compliance

In a bid to boost tax compliance and curb the practice of filing income tax returns after the due date, Pakistan has introduced stringent measures through the Finance Act 2024. This move marks a significant shift in the country’s tax compliance landscape and aims to streamline the tax collection process.

As the income tax return filing season for the tax year 2024 kicks off, taxpayers are being urged to take note of the critical changes. The deadline for salaried individuals, business owners, Associations of Persons (AOPs), and companies with a special accounting year is set for September 30, 2024. Companies following the fiscal year accounting period have a different deadline to adhere to.

Tax experts from KPMG Taseer Hadi & Co. have highlighted the legal amendments introduced to enhance compliance. The Finance Act 2019 had previously introduced Section 100BA and the Tenth Schedule to the Income Tax Ordinance, 2001, focusing on advance income tax collection, income computation, and tax obligations for individuals not listed on the Active Taxpayers List (ATL).

The Finance Act 2024 expands the scope of the Tenth Schedule to include individuals on the ATL who fail to file their returns by the specified due date, as outlined in the Income Tax Ordinance, 2001. This amendment is aimed at eradicating the culture of late filing, increasing the number of timely filers, and ultimately maximizing compliance.

A tax expert from KPMG Taseer Hadi & Co. explained, “The new measures are designed to enforce timely filing and discourage the habit of filing returns past the due date. By introducing the concept of late filers alongside non-filers, the government seeks to enhance tax compliance.”

This development underscores the government’s commitment to strengthening tax administration and broadening the taxpayer base. The enhanced penalties for late filers are expected to incentivize timely compliance and streamline the tax collection process.

As taxpayers navigate these new regulations, it is crucial to adhere to the specified deadlines to avoid penalties and ensure a smooth tax filing process. The Finance Act 2024 represents a proactive step towards reinforcing the integrity of the tax system and promoting fiscal responsibility among taxpayers in Pakistan.