The Tax Laws (Amendment) Bill 2024 introduces a new requirement for individuals and entities to declare the sources of funds for significant transactions. This measure aims to curb illicit financial flows and ensure transparency in financial dealings.
Declaration Requirement:
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- Individuals and entities are required to file a “source of investment and expenditure statement” on the FBR’s web portal.
- The statement must specify the source of funds used for the transaction.
Sufficient Resources:
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- To be considered eligible for a transaction, an individual or entity must have sufficient resources.
- For individuals, sufficient resources are defined as 130% of the cash and equivalent assets declared in their latest wealth statement.
- For companies and associations of persons, sufficient resources are determined based on the cash and equivalent assets declared in their latest financial statements.
Implications of this Provision:
- Increased Scrutiny: Individuals and entities making significant transactions may face increased scrutiny from tax authorities.
- Documentation Requirements: Proper documentation of the source of funds will be crucial to avoid penalties and legal consequences.
- Impact on Real Estate and Vehicle Purchases: The provision may affect the purchase of real estate and vehicles, particularly for high-value transactions.
- Potential Challenges for Businesses: Businesses, especially those dealing with large transactions, may need to implement robust financial tracking systems to comply with the new requirements.
It is important to note that the these now regulations will take effect from next Financial Year i.e 2025. It is advised to set your financial affairs in order and keep proper money trail alongwith documented evidence.
