Only 1.4m taxpayers submit annual returns for 2018

Over 340,000 people, who had earlier filed returns, remain outside the net this time

ISLAMABAD: The window for taking benefits of low withholding tax rates and buy an asset by becoming a filer will officially close down for one year on Monday, as over 1.4 million taxpayers have so far submitted their annual income tax returns.

Over 340,000 people, which were earlier on the Active Taxpayers List (ATL), have decided to remain outside the net this time by not fulfilling their statutory legal obligation. Only those people who are on the ATL are eligible to take advantage of low withholding tax rates and can buy cars and properties, according to the Income Tax Ordinance 2001.

For the tax year 2017, there are about 1.733 million taxpayers on the ATL and 20% of them have not filed their returns for the tax year 2018.



The Federal Board of Revenue (FBR) received 1.4 million income tax returns till Saturday, December 15, which was officially the last extended date for filing the returns, said the FBR officials. But the FBR believes that it has managed to expand the base by one-fourth, as till December 15, 2017, less than 1.1 million taxpayers had filed the returns.

“The return filing date is not being extended any further, however, since the last date of filing of returns fell on a non-working day, hence, as per General Clauses Act the closing date automatically shifts to next working day, which is Monday,” said Dr Hamid Ateeq Sarwar, the official spokesman of the FBR.

The income tax commissioners are also authorised to grant extension for a period of up to 15 days, on case to case basis, said the spokesman who is also member Inland Revenue of the FBR.



Every person who has annual income of more than Rs400,000, owns immovable property of minimum 200-250 square yards, owns a flat and a car of above 1,000cc and has obtained National Tax Number is liable to file the income tax return.

Under the law, September 30 of every year is the last statutory date for filing the income tax returns. But the FBR has the powers to extend the date, which after two extensions was December 15, which fell on an official holiday providing room to the people to also file their returns.

In order to encourage people to become filers on time, the government has also introduced some punitive measures.

“Where a person fails to file a return of income by the date as extended by the Board or extended by the Commissioner, such person shall not be included in the active taxpayers’ list for the year for which return was not filed within the due date; and not be allowed, for that tax year, to carry forward any loss,” according to Section 182A of the Income Tax law.

Sarwar said that although the receipt of return will not be blocked after due date, as per existing law the person who fail to furnish returns will not be put on the active taxpayers list.

According to the Income Tax Rules, the Active Taxpayers List will be published on March 1, 2019.

Those who will not be on the list cannot buy cars and properties valuing over Rs5 million. They will also have to pay higher income tax returns on every transaction they do including 0.6% withholding tax on all types of banking transactions.

Through the mini-budget Finance Minister Asad Umar also imposed penalties on manufacturers for selling vehicles to non-filers. The persons who would register properties in the name of non-filers would also be liable to pay penalties. Banks are now legally bound to share details of filers and non-filers who earn hefty profits on debts with FBR.

All these steps are aimed at broadening the tax net and increasing tax collection - the two fundamental challenges that are now threatening the fiscal sustainability of the country.

The FBR officials said that there were nearly 500,000 people who became filers in the last year for undertaking certain one-time transactions like buying a car or a property. These people may not be very wealthy persons or having minimal interfaces with the formal economy, according to the officials.

The FBR plans to launch another enforcement campaign aimed at sensitising the High Net Worth Individuals about their statutory obligations. 

Published in The Express Tribune, December 16^th, 2018.

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