FBR working on new law to end ‘late-filer’ status, ease family taxation

ISLAMABAD: The Federal Board of Revenue (FBR) is set to launch a mobile app aimed at simplifying the declaration of resources for the general public.

This app will allow users to submit information directly to the tax department, eliminating the need to visit a tax office for exemption certificates, according to a report by Business Recorder.

Taxpayers will simply need to fill in the “sources” section within the app, which will serve as their declaration for tax purposes. In addition, the FBR is drafting new legislation to remove the categories of “non-filers” and “late-filers” from the Income Tax Ordinance of 2001.

This comes after the concept of “late-filers,” introduced through the Finance Act 2024, was challenged in the Lahore High Court.

Under the proposed law, all individuals will need to justify their sources of income when making significant financial transactions, such as purchasing property or vehicles. The FBR will also establish monetary limits and thresholds to streamline this process.

One key proposal is that if a taxpayer is a filer and can justify their income, their immediate family members—such as a non-filer spouse, parents, children under 25, and unmarried or divorced daughters—will not need to file separate tax returns for conducting financial transactions.

The filer, however, must still declare the sources of income for any transactions made on behalf of the family.

The law is expected to simplify everyday transactions for the public. For instance, individuals would be able to buy motorcycles and used cars (up to 1300cc) without needing to declare income sources. For vehicles exceeding 1300cc or property purchases above Rs10 million, income justification would still be required.

An example given by sources suggests that if a taxpayer has Rs100 in hand, they could spend Rs130 without needing to account for the extra Rs30 to the tax authorities.

However, for larger property deals, involving substantial sums, the market value of the property and the sources of funds would need to be disclosed.

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