The Punjab government has introduced a significant amendment in the Punjab Finance Amendment Bill 2025, making it mandatory for accounts officers of both government and private institutions to deduct income tax from employees’ salaries and deposit it in the provincial treasury.
According to the amendment, any failure by the accounts officer to ensure tax deduction will render them personally liable to pay the outstanding tax amount. The new measure is aimed at curbing tax evasion and boosting provincial revenue.
The text of the bill places the onus of tax compliance on the financial heads of institutions, a move the government believes will plug longstanding loopholes in the salary declaration and taxation system.
It was observed that many employees, particularly in the private sector, underreported their incomes when filing taxes independently, taking advantage of inadequate employer disclosures.
This not only led to significant revenue losses but also encouraged systemic evasion of tax obligations.
The amendment empowers the Excise and Taxation Department to issue recovery orders against those found negligent in their duties. The department will be authorised to pursue the recovery of dues from the responsible accounts officers in case of any default.
Officials familiar with the matter say the step is part of a broader reform agenda to increase transparency in payroll systems and improve direct tax collection in the province.
The move is expected to impact thousands of institutions and may prompt a shift in how salaries and deductions are recorded and audited. However, experts caution that for effective implementation, the government must also invest in capacity building and robust monitoring mechanisms to ensure compliance without creating undue administrative burden.
The amendment comes at a time when the provincial government is under pressure to enhance its own revenue sources amid shrinking federal transfers and increasing development expenditure.
