Revenue body to remove late filers from active taxpayers list

KARACHI: The Federal Board of Revenue (FBR) will erase late filers from active taxpayers list (ATL), officials said on Tuesday, as last date of filing is falling end of the current week.

Late filers will be treated as non-filers and they cannot avail benefits of reduced withholding tax rates, the officials said.

The FBR received around 46 percent of returns for tax year 2017 after due date, but they are part of ATL. FBR received an estimated 1.07 million returns for tax year 2017 till December 15, 2017. Currently, there are 1.57 million filers in the ATL.

A senior FBR official said if an individual fails to file income tax return for tax year 2018 by due date, he will not be included in the ATL, which will be issued on March 1.

Tax practitioners criticised the FBR for the decision and called for its withdrawal as it would result in a massive exits from ATL.

They said there will be no attraction for taxpayers to file returns in such a case and the number of return filers will come drastically down.

Abdul Qadir Memon, president of Pakistan Tax Bar Association (PTBA) said a small number of tax returns have so far been filed as the last date for return filing is fast approaching.

Memon said taxpayers are in very difficult situation as there are glitches on the online returns filing system. The FBR has yet to upload the income tax return forms for companies.

“The FBR needs to extend the last date for filing returns in order to provide statutory time limit,” PTBA president said. The FBR should also withdraw the provision of late filing because it would be counterproductive to broadening the tax base.

The FBR official, however, said the law was introduced to create deterrence against the habit of late filing and discourage frequent extension of time limit.

The official further said the taxpayers will not be entitled to carry forward any loss to the tax year for which return of income is filed late, under the law.

Zeeshan Merchant, vice president of Karachi Tax Bar Association said the compliant taxpayers are greatly disappointed over measures taken by the government in broadening tax base.

Merchant said restriction imposed on late filers would discourage return filing after due date. “There will be no incentive to file returns after due date because such taxpayers will be treated as non-filers.”

KTBA’s official said the proposed withdrawal of restriction on non-filers to purchase properties and motor vehicles would further discourage filing of returns.

“A late filer will be subject to higher withholding tax rates and subject to audit, but non-filers will go scot-free.”