PROPOSED AMENDMENTS IN TAX LAWS AND THEIR EXPECTED IMPACT

Tax Law Amendment Bill 2024-25 has been presented in the National Assembly. Here are the proposed amendments and their expected impact

1. Non-filers will be prohibited from purchasing vehicles with an engine capacity exceeding 800cc.

Impact: This amendment will restrict non-filers, particularly affluent individuals, from purchasing higher-capacity vehicles, pushing them to file taxes. For common people, this may have minimal impact since most middle-class citizens opt for smaller vehicles.

2. Non-filers will not be allowed to purchase property beyond a specific value.

Impact: This will primarily affect wealthy individuals who avoid filing taxes. For common people, the restriction on high-value property purchases may not be significant, but it could still limit investment opportunities for small-scale property traders.

3. Non-filers will also be restricted from buying shares exceeding a certain limit.

Impact: This will deter non-filers from substantial investments in the stock market, likely reducing speculative trading by non-compliant individuals. For common people, this could encourage them to become filers to access the benefits of shareholding.

4. Non-filers will not be able to open bank accounts.

Impact: This will make financial inclusion more challenging for non-filers, impacting small businesses and individuals who rely on banking services. It will compel people to file taxes but may also push some towards informal financial systems.

5. Non-filers will face restrictions on conducting banking transactions exceeding a certain threshold.

Impact: Large-scale non-compliant businesses and individuals will be directly impacted, limiting their ability to conduct significant transactions. This may reduce tax evasion but could disrupt cash flow for small businesses reliant on banking for daily operations.

6. Non-filers will still be allowed to purchase motorcycles, rickshaws, and tractors.

Impact: This ensures that common people, especially those in rural areas who rely on these vehicles for daily transportation and livelihoods, remain unaffected by the stringent measures for non-filers.

7. Bank accounts of unregistered businesses will be frozen.

Impact: This will severely disrupt the operations of unregistered businesses, forcing them to register for tax compliance. However, it may also create financial hardships for small-scale or informal business owners.

8. Unregistered businesses will not be allowed to transfer property.

Impact: This measure will target unregistered real estate transactions, reducing tax evasion in the property market. For small traders, it could limit their ability to liquidate assets or grow their business without compliance.

9. The government will have the authority to seal properties of unregistered individuals involved in the real estate business.

Impact: This is a strong deterrent against tax evasion in the real estate sector. While it targets larger non-compliant entities, it could also affect smaller operators unaware of the regulations.

10. Failure to register for sales tax will result in bank accounts being frozen.

Impact: Businesses that avoid sales tax registration will face significant operational challenges. For common people, this may have minimal impact, but informal traders will face pressure to register.

11. Failure to register for sales tax will also lead to restrictions on property transfers.

Impact: This will discourage property dealings by unregistered businesses and individuals, increasing tax compliance. However, it could also slow down the property market due to increased regulatory hurdles.

12. Frozen bank accounts will be unfrozen two days after sales tax registration.

Impact: This provides a quick resolution for those who comply, reducing the operational downtime for businesses. It serves as a balanced incentive to encourage registration without long-term financial penalties.

13. Filers' parents, children under 25, and spouses will also be considered filers.

Impact: This is a positive step that simplifies compliance for families and encourages more people to file taxes. It reduces the administrative burden on dependents and promotes a culture of tax compliance within households.

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