Civil servants likely to lose allowances for non-filing of returns

KARACHI: The Federal Board of Revenue (FBR) has decided to get allowances of civil servants stopped for their non-compliance with an obligation to file income tax returns, officials said on Saturday.

The officials said the FBR is taking measures against non-filers of income tax returns and so the allowances of civil servants will be stopped for non-compliance with the help of government departments.

An official at Regional Tax Office, Karachi said the top brass of the FBR had recently met with Prime Minister Shahid Khaqan Abbasi and raised the issue of non-compliance by civil servants having taxable income but not declaring their income and expenditures with the tax authorities.

The official said the FBR, with an approval of the prime minister, issued directives to all the federal government departments to provide details of employees with grade 17 and above.

The FBR will issue notices to all the non-filer civil servants in the first phase.

On continuous non-compliance, the FBR will ask the concerned secretaries of federal ministries and heads of departments to stop allowances of the non-compliant government servants.

“The prime minister had approved the measure of stopping allowance of non-filers,” the official added. “This practice will also be adopted in case of provinces.”

The officials said the non-compliance by provincial government employees is much higher.

The FBR will also write to chief ministers and secretaries to help the tax authorities in improving tax base as well as generating more revenue for development expenditures, they added.

An official further said the FBR has activated the broadening of tax base offices at three major stations, including Karachi, Lahore and Islamabad.

Currently, the Federal Board of Revenue is sending notices to non-filers.

Officials said the return filing trend in Pakistan is highly disappointing as around one million income tax returns were filed for tax year 2017 despite that FBR so far issued 3.7 million national tax numbers to people who are mandatorily required to file returns.

The International Monetary Fund, in a working paper, said there is an immense return filing potential for working class.

Around 56.5 million people are employed, while around 5.7 million people are earning above the income tax threshold of Rs400,000, according to the paper ‘Unlocking Pakistan’s Revenue Potential’.

Tax experts said the Federal Board of Revenue should simplify the income tax returns form for salaried class in order to increase the number of return filers.

A couple of years back, the salary statements of employees provided by employers, were treated as returns. But, now employees having income above Rs400,000 are required to electronically file their declarations along with wealth statement.

Tax Reforms Commission, in its report submitted to the ministry of finance, said every individual generating income should be required to file return of total income on annual basis along with the single page simplified wealth statement in order to strengthen the compliance with the tax return filing requirement.