A welcome exemption

In a welcome move, the federal government has waived the penalties imposed on nearly 320,000 salaried-class individuals who had been randomly selected for an audit as they had filed their income tax returns for the last three fiscal years after the due date. The PTI government’s decision to impose penalties on the late filers had shattered the confidence of return filers, raising questions on the price of being a tax filer coming in the form of penalties. The nearly 320,000 salaried persons were among 1.02 million cases of late tax filing automatically selected by the FBR’s online system under Section 214D of the ncome Tax Ordinance, 2001, which was deleted through the Finance Act, 2018.

Minister of State for Revenue Hammad Azhar announced the decision of exempting salaried persons in a tweet: “The government has decided to waive the penalty for late filing along with the audit for the salaried group of late filer cases.” Although the minister announced the exemption only for the salaried persons, the FBR extended the scheme to those earning money in the form of dividends and profits on debt. Even though the decision to waive the penalty will cost the FBR Rs6.5 billion in potential revenues, it will serve to instil confidence among the taxpayers that they will not be harassed unnecessarily.

Coming just three days ahead of the last date for filing tax returns for the fiscal year 2017-18, the decision is sure to help the government rope in much of those distracted by the earlier move to carry out a tax audit and impose penalties. Pakistan, a 208 million strong nation, only has 1.4 million people who file income tax return — a partly 0.67%. Charging them a penalty instead of encouraging them to become a filer in a non-compliant society was a questionable decision, and the government moved in time to withdraw it.

Published in The Express Tribune, November 30^th, 2018.

Like Opinion & Editorial on Facebook, follow @ETOpEd on Twitter to receive all updates on all our daily pieces.