PML-N govt steps help in increasing tax filers

ISLAMABAD: While the ruling party has rushed to take credit of increase in tax filers from 1.1 million to 1.45 million, the experts however believe that the increase in tax filers is linked with the incentives introduced through the budget presented by PML-N.

Especially, the two major incentives that the experts believe has led to this increase of becoming an active filer are restriction on purchase of property for a non-filer and setting a cut-off date for return filing to be qualified as an active taxpayer of the year.

Prior to the last budget, an individual could have filed the tax returns even after the due date set by the FBR but avail complete incentives of a tax filer thorough the fiscal year. The last budget however, sets a cut-off date for tax filing to avail benefits of an active tax filer in the current fiscal year. Any person filing tax returns after the due date will no longer be able to avail the tax benefits available to an active tax filer.

Minister of State for Revenue Hammad Azhar addressed a press conference on December 17 and announced that the number of taxpayers in Pakistan have risen by 30 percent in last one year. According to him, the PTI-government was committed to bringing tax reforms and widening the tax net for putting Pakistan on the path of progress and prosperity.

However, the experts believe incentives introduced by the previous government for the filers has attracted many people to enter the tax net. Similarly, the two new conditions added by the PML-N government in its last budget has also compelled the taxpayers to file their tax returns by the end of due date. Otherwise they will no longer avail the incentives for the rest of fiscal year, said the experts.

Haroon Akhtar Khan, former special assistant to prime minister on revenue while talking to The News said, previously if someone failed to file his tax returns he was sent a notice of tax audit. The backlog of tax audit had reached to 0.9 million and the government has no capacity of audit on such a mass level.

Initially, a suggestion was floated that the tax audit option should be abolished but later this suggestion was dropped. Instead, Shahid Khaqan Abbasi’s government added two new conditions for bringing more people into tax net for filing their annual returns.

“We, therefore, added two conditions in the federal budget 2018-19 to attract more and more tax filers. First condition is that if someone doesn’t file his tax return by the end of due date, he will not be able to become a tax filer for the ongoing fiscal year. The second condition is that if someone has accumulated losses, he won’t be able to use those losses for the next fiscal year if he missed the deadline of filing his tax returns. Both these conditions are part of budget document now”, informed Mr Akhtar.

These conditions are so intense that people would automatically opt for filing their tax returns within due date. According to him, due to these conditions the number of tax return filers has increased from 1.1 million to 1.45 million compared to previous fiscal year.

“These conditions were not in place last year due to which people continued filing their tax returns even after due date. This is why 1.75 million taxpayers are on the ATL. By the end of February 28, 2018, the ATL might cross 2 million”, he said.

According to tax experts, the government is comparing this year’s filers with the last year’s tax filers. The previous government placed very harsh conditions especially by setting up a cut-off date for filing the returns. Due to these conditions at least those who were on ATL (1.75 million) should have filed their returns by the due date. However, the government has received only 1.4 million tax returns and 20 percent of the ATL haven’t filed their tax returns for the tax year 2018. The government has actually worsened the situation because after December due date those who file their tax returns, will not become tax filers hence no incentive for them. The government should have advertise it regularly to educate the people about the incentives of a filer and repercussions of a non-filer.