The Pakistan Tehreek-e-Insaf (PTI) government received only 1.67 million income tax returns till the extended deadline and fell short of last year’s figure by nearly 1.3 million, as it could not instill a tax compliance culture in the nation.
Despite a massive reduction in the number of income tax return filers for tax year 2020 that ended on June 30, the government has so far taken the stance that it will not grant any further extension in the last date for filing returns.
The Federal Board of Revenue (FBR) has resisted pressure from powerful lobbies and decided to take a hit on its numbers for the time being instead of granting a further extension.
Although a 43% reduction in the number of income tax return filers highlights issues of bad governance and weak tax management, the FBR’s decision of putting an end to frequent extensions in dates would help bring the house in order.
Till the expiry of the deadline, over 1.67 million taxpayers submitted annual returns for tax year 2020, which ended in June this year, a senior official of the FBR confirmed to The Express Tribune.
In tax year 2019, the FBR had received a total of 2.96 million income tax returns. There was a reduction of 43% or 1.29 million in the number of return filers, which should be a matter of grave concern for Prime Minister Imran Khan.
The 1.67 million tax returns were also slightly lower than the returns received till December 8, 2019, although comparison with December last year became irrelevant after the FBR decided not to give a further extension.
A senior FBR official responsible for tax operations hoped that the total number of return filers may exceed last year’s benchmark by June next year.
Before coming to power, Prime Minister Imran Khan had a strong belief that an “honest leadership” could convince people to pay taxes and become a tax-compliant nation. However, his government struggled to motivate the people to adopt the tax culture.
He had promised to double the tax collection figure to Rs8 trillion, which seems impossible looking at the number of the first two years in power.
The FBR also lacked the will to enforce its writ and instead of chasing people who failed to timely submit returns in the past, it last week started closing 310,000 audit cases that had been selected for audit due to failure of people to file returns about four to six years ago.
The FBR had also launched a campaign to convince 7.4 million people to file returns or else it would take them to task. This campaign too did not help.
An individual who has annual income exceeding Rs400,000, owns a home or a car is legally bound to file annual tax return. In case of late filing of return, the law empowers the FBR to slap a Rs40,000 fine on the person.
But the FBR insists that it has still done a good job. “Today, the FBR has received record number of tax returns. Our online system is functioning smoothly and currently a large number of taxpayers are preparing returns online and the number of returns is increasing quickly,” according to a tweet by the FBR.
If the trend continues, it is expected that the total number of returns for the day may reach near 200,000, it added.
Till Monday, the FBR had received 1.5 million returns.
The easy decision was to extend the date for three more weeks but the FBR decided to stand its ground and end the practice that had been going on for years, said the senior FBR official.
The statutory date for filing income tax returns - a statement of income and expenditure of a taxpayer - is September 30. However, due to delay in finalising the return form, the FBR extended the date till December 8.
The FBR had announced that the people facing problems in filing the income tax returns may apply for online extension or can manually submit requests in their respective tax offices, but before expiry of the date.
The FBR clarified that one request for extension addressed to the Chief Commissioner Inland Revenue concerned could cover multiple taxpayers provided it contains taxpayers’ names, their CNIC/NTN and identification of jurisdiction.
“Few errors were found in the income tax return form 2020 and some apex body of tax practitioners approached the FBR and briefed them on some miscalculation in formula,” according to the Karachi Chamber of Commerce and Industry’s request to PM Imran.
The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) also approached PM Imran for the grant of extension till February 15, 2021. It said huge returns were pending for submission due to certain discrepancies while filling the returns, political situation and above all the Covid-19 all over the country.
The FPCCI’s statement highlights the nation’s culture of avoiding its duties, as the current political situation does not bar any person from submitting the annual statement of income and expenditure.
Pakistan Knitwear & Sweater Exporters Association also appealed to the prime minister to extend the date.
Published in The Express Tribune, December 9th, 2020.
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