4% of the property's value will be considered fair market rent.
The Finance Bill 2025 suggests a reasonable rent calculation for commercial buildings. It says that the fair market rent should be at least 4% of the property’s FBR-notified value. This program is meant to stop people from not declaring their rental income. But if the real rent is lower, taxpayers can give the Commissioner reliable documentation evidence to back up the amount they said they paid. This makes sure that there is a balance between justice and enforcement when it comes to reporting rental income.
10% Penalty for Buying from Non-NTN Holders
The Bill suggests that 10% of the money spent on purchases from people who are not registered with an NTN should not be allowed. This would encourage documentation and broaden the tax base. But there are certain exceptions, such buying agricultural products directly from farmers and others who have been told by the FBR. The goal of the initiative is to move business interactions toward suppliers that are registered and have paperwork.
50% Off on Cash Sales More than Rs. 200,000
It is suggested that undocumented sales be strongly discouraged by not allowing 50% of expenditures associated to sales if payment per invoice exceeds Rs. 200,000 and is done in cash or through non-banking modalities. The goal of this rule is to cut down on cash transactions and encourage the use of financial channels that can be tracked.
No depreciation permitted on purchases that weren't withheld
The Bill suggests that depreciation should not be permitted on assets bought without deducting and paying the appropriate withholding tax under Sections 152 or 153 to make sure that people pay their withholding taxes. These types of assets will not be included in the depreciation base, which will make it less appealing to buy assets that don’t comply.
Group Relief Only Available to Companies with Normal Tax Rates
Companies that pay taxes under fixed/final or special regimes would no longer be eligible to get group assistance. Now, the relief will only go to enterprises who pay the regular corporation tax, which is the same as the entire corporate tax burden.
Tax Break for Home Loans Reintroduced in Section 63A
The Bill brings back the tax credit for profit on debt for loans taken out to buy or build a single-family home (up to 2,500 square feet) or a flat (up to 2,000 square feet). The loan may only be taken out once every 15 years by each person. It must be secured from scheduled banks or other qualifying financial organizations. This is meant to help first-time homebuyers.
Economic Restrictions for Non-Filers Are Back
The Bill suggests putting further limitations on those who don’t file taxes in order to get illegal people to pay taxes. People who aren’t qualified won’t be able to register high-value automobiles, buy real estate worth more than a certain amount, open bank accounts with no restrictions, or trade stocks. This will make sure that people follow the rules by limiting what they can do.
Clubs for fun Not eligible for NPO status
Section 2(36) says that recreational clubs that charge more than Rs. 1 million for membership would no longer be considered Non-Profit Organizations (NPOs). The Bill also suggests taxing profits made from selling products or services to members, making sure that businesses that make money are taxed fairly.
NPOs Under Table I Made This is in accordance with Section 100C
Institutions that used to be completely exempt under Table I of Clause 66, Part I, Second Schedule will now have to follow the rules in Section 100C. Combining Tables I and II makes guarantee that all tax-exempt NPOs have the same rules for governance and reporting.
Time to pay off intangibles Cut down to 15 years
It is suggested that the maximum time for amortizing intangible assets having an infinite useful life be cut from 25 years to 15 years. This move is in line with international accounting standards and makes it easier to recognize these costs more quickly, which gives you more options for tax planning.
Business losses were reversed in the Inter-Head Adjustment
The 2021 rule that let businesses use losses to offset profits from property is being taken away. The Bill brings back the situation that existed before 2021, keeping the integrity of income heads and stopping cross-head adjustments from causing inadvertent revenue loss.
More credit options for Sindh coal mining projects
Coal mining firms in Sindh would no longer have to just supply power generation companies to get a full tax credit. The proposed change allows sales to more than one industry, which makes the business more viable without losing tax incentives.
The minimum tax carryforward period is now only two years.
The time you can carry over the minimal tax you paid over your usual tax bill is suggested to be cut from three years to two years. This modification encourages people to modify their tax credits on time and makes tax planning more rigorous.
Digital payments are recognized for buying high-value assets.
Digital payments are now clearly accepted for buying real estate worth more than Rs. 5 million and other assets worth more than Rs. 1 million. This is to make things more open and cut down on the use of cash in big transactions. This is in addition to crossed checks and other banking tools.
The time limit for amended assessments under Section 122 has been removed.
It is suggested that the 120-day legal deadline for issuing modified directives under Section 122 be removed. This deadline can be extended by 90 days. This gives the FBR more freedom in how they run things, but it might also make things more unclear for taxpayers for a longer time.
No Appeal Effect Order Needed if Assessment Stays.
If an appellate authority completely agrees with the initial tax ruling, it will not issue a separate appeal effect order. But if any changes are made, a new appeal effect order will be needed. This explanation of the process makes it easier to carry out after an appeal.
Appeals Before CIR(A) Allowed Without a Minimum Tax Threshold
The Bill gets rid of the rule that says you have to pay a certain amount of tax before you may appeal to the Commissioner (Appeals). Taxpayers may now appeal any assessment and don’t have to go via CIR(A) first. They can go straight to the Appellate Tribunal Inland Revenue (ATIR).
The time for High Court Reference has been lengthened to 60 days.
The time limit for submitting a referral with the High Court has been raised from 30 to 60 days. The scope, on the other hand, is now restricted to pure legal matters, which makes things clearer and gives people enough time to get ready.
It is possible to reconstitute ADR Committees for SOEs.
If an ADR Committee doesn’t make a decision within 60 days in a dispute involving State-Owned Enterprises (SOEs), the FBR might establish a new committee with a new 60-day deadline. This system is meant to stop delays that last forever and make sure that things get settled.
Tax analytics may now use FBR-Bank Data Exchange.
The Bill gives FBR permission to exchange taxpayer profile data with banks to make sure that the revenue reported matches the real banking activity. Banks will have to notify any differences. This breaking of banking confidentiality restrictions makes tax enforcement based on data stronger.
More Taxes on Cash Withdrawals by People Who Don't File
The proposed rise in the advance tax rate on cash withdrawals above Rs. 50,000 in a day by non-filers is from 0.6% to 0.8%. This change makes it much less appealing to not file and encourages people to move to the documented economy.
Tax Credit of 25% for Teachers Restored Retrospectively
The tax break that teachers and researchers have been asking for a long time is set to be reintroduced with effect from July 1, 2022. Full-time teachers at accredited schools will again pay 25% less in taxes on their wage income until Tax Year 2025.
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