Restrictions and Disadvantages of Being a Non-Filer
By CFO Oversight | Karachi
Non-filers are individuals, companies, or AOPs not listed on the FBR’s Active Taxpayer List. It means they didn’t file returns for the latest completed tax year, or in case of late return filing unable to pay the required ATL surcharge.
Through the Finance Act 2025, Pakistan’s government and the Federal Board of Revenue (FBR) introduced strict new restrictions targeting non-filers. These restrictions are mentioned below:
- Non-filers can no longer freely purchase high-value documented assets, including property, vehicles, and investments;
- They are subject to an increased rate of withholding taxes, in some cases even more than 300% of the normal tax rate;
- They, if resident, cannot hold foreign currency in their account;
- They are subject to withholding tax on cash withdrawals, whereas filers are not;
- Their SIMs and internet connections are at high risk of getting blocked;
- They cannot get new utility connections in their name; and
- They cannot run an online business through any marketplace.
With every passing day, new restrictions are being introduced. Now, FBR is also planning to prohibit banks to open bank accounts of non-filers and block operative bank accounts. This means they will be banned from accessing even financing facilities and loans from the financial sector.
All the above restrictions are discussed in detail below:
1. Ban on Purchase of High Value Assets:
It is now practically impossible for Non-Filers to acquire any high-value documented assets except for debt securities.
Property: Cannot buy property above PKR 05 million. Even when buying property, they have to pay much higher (around 300% higher than the usual rate) withholding tax on any allowed transaction.
Vehicles: Cannot purchase/register motor vehicles unless on ATL. Even if allowed under some circumstances to transfer such a vehicle, they must pay higher taxes (200% higher than the usual tax rates).
Securities: Cannot purchase new securities, including mutual fund units, share certificates, or listed instruments. If they already have such assets in their names, they have to pay much higher taxes on sales and face higher CGT rates.
2. Higher Withholding Tax Rates:
Where tax is required to be deducted or collected under any provision of the Income Tax Ordinance, 2001, from persons not appearing in the active taxpayers’ list, the rate of tax required to be deducted or collected, as the case may be, shall be one hundred percent higher than the rate specified.
For withholding tax on the purchase of cars, the applicable rate shall be 200% increased from the specified rate.
For the sale and purchase of property (within limits) and specified goods and services, different rates have been specified that are much higher than the rate specified for filers.
3. Banking Restrictions:
Non-filers who are residents cannot hold/receive foreign currency through the banking channel. State Bank of Pakistan prohibits banks from allowing foreign currency transactions for account holders who were late filers or not on the ATL.
Another amendment is under consideration, which bans Non-filers from opening fresh bank accounts or holding any bank account in his / her name unless it is an Asaan account or a pensioner account.
Existing accounts flagged: It is under consideration that banks must freeze or close non-filers’ accounts if they don’t comply with filing requirements. FBR is allowed to share tax data with banks under Section 175AA.
4.Tax on Cash Withdrawals:
For non-filers, advance tax on daily cash withdrawals over PKR 50,000 will be 0.8% of the exceeding amount. No tax is required to be deducted on cash withdrawals by filers.
The withdrawal limit on non-filers is proposed to be increased to PKR 75,000, but it is still at the proposal stage.
5. Mobile SIM and Internet Restrictions:
FBR has the authority to ask telecom operators to block SIMs of non-filers. Previously, this power has been exercised to some extent. It is currently expected that FBR may order telecom providers to disable mobile SIMs of more than 500,000 non-filer individuals.
It is under consideration that non-filers will not be allowed to register new SIMs or internet devices.
New utility connections are also not being granted to non-filers, whether this utility belongs to electricity, gas, water, internet, etc.
6. E-Commerce and Online Business Ban:
A vast number of individual business owners were operating in E-Commerce, and online marketplaces have now been brought into the tax net through mandatory sales tax and income tax registration. Introduction of control on the marketplace and delivery has made it impossible for online businesses to operate without tax registration. Once registered, they have to be filed to avoid higher taxes.
The FBR is leveraging algorithms to compare tax data with bank transactions; discrepancies will trigger action under Section 175AA.
What Should Be Done?
File your income tax return now and have continuous check on your ATL status.
Make sure you and your business, accounts, and properties are listed.
Maintain proper records — Keep proof of income, bank statements, and wealth reconciliation.
Update banks, dealers, and agents — When buying property or opening accounts, present ATL confirmation.
Ask for professional help — Consult a tax advisor, especially if you’re a business owner or high-net-worth individual.
What CFO Oversight is Doing?
With increased complexity and requirements, the need for good knowledge is becoming inevitable, especially when it comes to revenue collection authorities. Legal Synergy specializes in assisting individuals and businesses with tax registration, planning, regular compliance, ATL compliance, and transaction readiness. We at CFO Oversight are available 24/7 to assist you in your compliance and provide a one-window solution for your business needs.
IMPORTANT NOTE:
Pakistan is taking a hard stance on non-compliance by linking everyday financial activities directly to tax-filing status. No more excuses now for anyone earning taxable income or holding significant assets. They must file their returns, get on the ATL, and enjoy unrestricted access to bank services, property, and investments.
CONCLUSION:
Effective tax management is not about tax avoidance—it’s about compliance, smart planning, and diligent execution. At CFO Oversight, we specialize in providing legally compliant, strategic tax advisory services to startups and SMEs across Pakistan.
For a Tax Health Review or to explore our Virtual CFO offerings, get in touch with us with the help of below-mentioned contact details.
