Punjab makes accounts officers liable for salary tax deductions under new law

LAHORE: In a major step to curb tax evasion and boost revenue, the Punjab government has amended the Punjab Finance Amendment Bill 2025, making it mandatory for accounts officers in both public and private institutions to deduct income tax from employees’ salaries and deposit it in the provincial treasury.

The amendment places personal liability on accounts officers for any failure to deduct or deposit due taxes, marking a significant shift in accountability for payroll compliance.

Officials say the move targets widespread underreporting of income, particularly in the private sector, due to weak employer disclosures, which have led to substantial revenue losses.

The Excise and Taxation Department has been empowered to issue recovery orders and pursue defaulting officers directly. The change is part of broader reforms to increase transparency and strengthen direct tax collection.

While the measure is expected to affect thousands of institutions and improve compliance, experts warn it must be backed by training and effective monitoring to avoid excessive administrative burdens.

The reform comes as Punjab faces growing fiscal pressure from reduced federal transfers and rising development costs.