The Punjab government on Tuesday introduced an amendment to the Punjab Finance Amendment Bill 2025 to curb tax evasion.

According to the new regulation, accounts officers in government and private institutions are now bound by law to deduct income tax from workers' pay and remit it directly to the provincial exchequer.

What distinguishes this amendment is its uncompromising accountability provision — if an accounts officer cannot guarantee the deduction and deposit of income tax, he or she will be personally held liable to pay the amount of overdue tax.

This shift is designed to address a persistent problem: underreporting of wages, particularly in the private sector, where workers frequently reported taxes on their own with minimal to no employer control. This loophole has resulted in millions in lost revenue for the provincial government while enabling institutional tax evasion to flourish.

Now, the Excise and Taxation Department is also empowered to send recovery notices and take legal action against defaulting accounts officers. Officials privy to the situation feel this amendment is also part of a larger game plan to enhance transparency in salary systems and enhance direct tax collection.

Although the move is likely to impact thousands of institutions in Punjab, tax professionals indicate that effective implementation will depend on the training of accounts officers and robust monitoring mechanisms to prevent overloading institutions.

As federal grants dwindle and development requirements escalate, Punjab's initiative is a firm pursuit of self-reliance and enhanced fiscal prudence.