FBR Finds Rs. 750 Billion in Bank Deposits by Zero-Income Filers

The National Assembly Standing Committee on Finance was told that an analysis by the Federal Board of Revenue found major gaps between declared income and actual financial activity, as lawmakers reviewed the proposed faceless tax administration system and a new fixed-tax scheme for retailers.

During a detailed briefing, FBR Chairman Rashid Mahmood Langrial informed the committee that an analysis of 8,697 individuals showed bank deposits worth Rs. 750 billion, even though many of them had declared zero income in their tax returns. He said 99 percent of these high-deposit individuals had underreported income, while around 80 percent had not declared properties they had purchased.

The meeting, chaired by MNA Syed Naveed Qamar, examined the FBR’s proposed faceless tax model and measures aimed at bringing millions of retailers into the tax net.

Langrial told the committee that the FBR was restructuring Inland Revenue along the lines of reforms introduced in Customs, where a faceless system had improved efficiency and transparency. Under the proposed model, tax administration would be divided into three separate pillars: a National Faceless Audit Wing, a National Assessment Wing, and a Field Operations Wing.

He said the faceless audit system would carry out risk-based audits through digital processes and remove direct interaction between taxpayers and tax officials. No FBR officer would be able to issue notices independently under the new framework, he added.

According to the chairman, taxpayers would be given online hearing facilities and would retain the right to appeal before appellate forums, while the audit wing itself would not have the authority to pursue tribunal proceedings.

Committee members raised concerns about the possible impact of the proposed model. MNA Javed Hanif Khan questioned how taxpayers would be heard during initial assessments and warned that many citizens might struggle to deal with a fully digital process.

In response, Langrial said all hearings would be conducted online and that the system would mainly target individuals with significant taxable transactions.

MNA Sharmila Faruqui said the proposed mechanism could risk turning into a surveillance model by centralising access to citizens’ financial data. Finance Minister Muhammad Aurangzeb defended the reforms, saying the objective was to reduce human discretion, improve compliance, and curb tax evasion through technology-based oversight.

The minister said similar systems were already in use in several countries and would be introduced in Pakistan gradually. He added that modern tax administrations increasingly rely on data analytics and risk-based assessments instead of frequent physical interaction with taxpayers.

The committee was also informed that artificial intelligence tools and algorithms would play a growing role in identifying discrepancies between declared income and actual financial activity. Langrial said the FBR had partnered with educational institutions, including LUMS, to strengthen data analytics capacity and build technological expertise within the organisation.

During the meeting, lawmakers also discussed a proposed fixed-tax scheme for retailers. Minister of State for Finance Bilal Azhar Kayani told the committee that more than 3.49 million retailers remained outside the tax net, while only around 660,000 were currently registered.

He said the government expected a significant expansion in the tax base under the scheme. If 30 percent of unregistered retailers joined the system, more than one million new taxpayers could be added, while the registration of two million retailers could generate an estimated Rs. 50 billion in additional annual revenue.

Under the proposed framework, eligible retailers would pay a fixed annual tax of Rs. 25,000 and would be exempt from withholding tax on purchases, the minimum tax regime, and point-of-sale integration requirements.

Kayani said retailers joining the scheme would not be subjected to routine audits, though authorities would retain the power to investigate cases involving substantial unexplained assets or financial transactions.

Officials also told the committee that penalties had been proposed for non-payment of the fixed tax, ranging from Rs. 10,000 in the first month to Rs. 50,000 in the third month, with business closure powers also under consideration for repeated non-compliance.

Separately, the committee was briefed on power sector reforms, including the introduction of a simplified electricity bill format aimed at improving transparency and making billing information easier for consumers to understand. The revised format highlights key details such as electricity consumption, payment deadlines, and billing components, and also includes QR codes for access to additional digital services.

The committee is expected to continue deliberations on the proposed tax reforms and related provisions of the Finance Bill in upcoming meetings.