Tax returns: As filing date nears, FBR yet to come up with forms
Revenue board considering extending return filing deadline by a month .
The Federal Board of Revenue has set August 31 as the deadline for individuals and Association of Persons to file income tax returns, carrying details of their incomes and expenditures for the year 2012-13. CREATIVE COMMONS
ISLAMABAD:
The usual bureaucratic lethargy is obstructing taxpayers, who are also not keen to fulfill a legal obligation by submitting income tax returns, as authorities have not yet come up with the tax return form two weeks before the expiry of the return-filing deadline.
The Federal Board of Revenue has set August 31 as the deadline for individuals and Association of Persons to file income tax returns, carrying details of their incomes and expenditures for the year 2012-13. The deadline is approaching fast but FBR has yet to furnish the form, increasing prospects for an extension, sources say.
They added the FBR was considering extending the date for filing the tax returns by at least a month to September 30, which is also the last date for submitting the returns by big corporations.
The law requires every individual making earnings as well as companies to file income tax returns and failing to do so invites penalties.
An extremely narrow tax base has exposed the country to criticism from the international community that has time and again taken Pakistan to task for failing to expand the tax base and relying on foreign taxpayers to meet its expenditures. In a population of 180 million, less than 800,000, or 0.4% of the population file returnsincome tax filers number less than 800,000 or 0.4% of the population – a ratio which is around 5% in India.
The new IMF programme that the IMF’s Executive Board is expected to approve next month also carries a condition to widen the tax base. A part of this condition is to serve legal notices on 100,000 big tax evaders in the current fiscal year including 30,000 from July to September.
The FBR has so far sent notices to over 11,000 tax dodgers. Apart from this, Dr Mohammad Iqbal has been appointed Commissioner of Broadening Tax Base by relieving him of his earlier post of chief of income tax policy. Amjad Zubair Tiwana has been appointed chief of IT Policy.
The sources said the FBR’s inability to swiftly incorporate changes made in the Income Tax Ordinance of 2001 delayed the finalisation of the income tax return form. After incorporating the changes, the FBR has sent the form to the Ministry of Law for vetting.
One of the major changes is the addition of wealth tax statement and a calculation formula for the income support levy. The levy has been imposed on movable assets of the wealthy at 0.5% and receipts are said to be used for the Benazir Income Support Programme.
The FBR has also incorporated sections that allow companies to claim 15% tax credit for listing on the stock market as part of a drive to encourage corporatisation and also allows new industrial undertakings to claim tax breaks for five years.
Annexure-D seeking every detail of household expenditures and income will also be part of the new income tax return like the previous year.
However, despite having every detail the FBR has remained unsuccessful in broadening the tax base. According to statistics for fiscal year 2011-12, income tax filers paid a meagre Rs14.9 billion with the returns.
The amount is equal to what the FBR collected on electricity bills and less than half the tax received on telephone bills in 2011-12.
The FBR’s failure to initiate meaningful audit of the taxpayers is said to be one of the main reasons behind such dismal numbers in addition to deep-rooted corruption in the tax machinery.
In 2011-12, the FBR collected only Rs159.7 million from wholesalers having annual sales of over Rs50 million, Rs26.5 million from small retailers and Rs101.5 million from land developers.
Contrary to this, it got Rs420.1 billion in withholding tax that became an easy tool for collecting taxes even from those who fall below the income tax exemption threshold of Rs400,000 worth of annual income.
According to a senior FBR official, if everyone starts filing tax returns, the FBR will end up paying more refunds than what it gets in income tax with the returns. Every mobile phone user, out of total 125 million connections, pays 15% withholding tax irrespective of his annual income.
Published in The Express Tribune, August 15th, 2013.
The usual bureaucratic lethargy is obstructing taxpayers, who are also not keen to fulfill a legal obligation by submitting income tax returns, as authorities have not yet come up with the tax return form two weeks before the expiry of the return-filing deadline.
The Federal Board of Revenue has set August 31 as the deadline for individuals and Association of Persons to file income tax returns, carrying details of their incomes and expenditures for the year 2012-13. The deadline is approaching fast but FBR has yet to furnish the form, increasing prospects for an extension, sources say.
They added the FBR was considering extending the date for filing the tax returns by at least a month to September 30, which is also the last date for submitting the returns by big corporations.
The law requires every individual making earnings as well as companies to file income tax returns and failing to do so invites penalties.
An extremely narrow tax base has exposed the country to criticism from the international community that has time and again taken Pakistan to task for failing to expand the tax base and relying on foreign taxpayers to meet its expenditures. In a population of 180 million, less than 800,000, or 0.4% of the population file returnsincome tax filers number less than 800,000 or 0.4% of the population – a ratio which is around 5% in India.
The new IMF programme that the IMF’s Executive Board is expected to approve next month also carries a condition to widen the tax base. A part of this condition is to serve legal notices on 100,000 big tax evaders in the current fiscal year including 30,000 from July to September.
The FBR has so far sent notices to over 11,000 tax dodgers. Apart from this, Dr Mohammad Iqbal has been appointed Commissioner of Broadening Tax Base by relieving him of his earlier post of chief of income tax policy. Amjad Zubair Tiwana has been appointed chief of IT Policy.
The sources said the FBR’s inability to swiftly incorporate changes made in the Income Tax Ordinance of 2001 delayed the finalisation of the income tax return form. After incorporating the changes, the FBR has sent the form to the Ministry of Law for vetting.
One of the major changes is the addition of wealth tax statement and a calculation formula for the income support levy. The levy has been imposed on movable assets of the wealthy at 0.5% and receipts are said to be used for the Benazir Income Support Programme.
The FBR has also incorporated sections that allow companies to claim 15% tax credit for listing on the stock market as part of a drive to encourage corporatisation and also allows new industrial undertakings to claim tax breaks for five years.
Annexure-D seeking every detail of household expenditures and income will also be part of the new income tax return like the previous year.
However, despite having every detail the FBR has remained unsuccessful in broadening the tax base. According to statistics for fiscal year 2011-12, income tax filers paid a meagre Rs14.9 billion with the returns.
The amount is equal to what the FBR collected on electricity bills and less than half the tax received on telephone bills in 2011-12.
The FBR’s failure to initiate meaningful audit of the taxpayers is said to be one of the main reasons behind such dismal numbers in addition to deep-rooted corruption in the tax machinery.
In 2011-12, the FBR collected only Rs159.7 million from wholesalers having annual sales of over Rs50 million, Rs26.5 million from small retailers and Rs101.5 million from land developers.
Contrary to this, it got Rs420.1 billion in withholding tax that became an easy tool for collecting taxes even from those who fall below the income tax exemption threshold of Rs400,000 worth of annual income.
According to a senior FBR official, if everyone starts filing tax returns, the FBR will end up paying more refunds than what it gets in income tax with the returns. Every mobile phone user, out of total 125 million connections, pays 15% withholding tax irrespective of his annual income.
Published in The Express Tribune, August 15th, 2013.