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January 18, 2019

Govt mulls incentives to reward income tax filers


January 18, 2019

KARACHI: The government is mulling more immediate rewards for income tax returns filers in the planned mini-budget to up the ante on compliance, officials said on Thursday, as part of its effort to broaden the tax net.

Officials at the Federal Board of Revenue (FBR) said the government might amend the provision to include names of late filers of income tax returns in the Active Taxpayers List (ATL).

Besides, it also consider to abolishment provision of automatic selection for audit of late filers.

The previous government in the budget 2018/19 had introduced Section 182A of the Income Tax Ordinance, 2001, under which later filers have been denied to appear in the Active Taxpayers List.

According to the ordinance, “[The late filer] will not be included in the active taxpayers' list for the year for which the return was not filed within the due date.”

The FBR notified that the said section would apply from the tax year 2018 onwards for which the first Active Taxpayers List is to be issued on March 1, 2019 under the Income Tax Rules, 2002.

The revenue board received around 1.5 million income tax returns for the tax year 2018 and such number would appear in the ATL to be released by the FBR on March 1, 2019.

The number of return filers under the prevailing ATL for the tax year 2017 has reached around 1.8 million.

Around 1.1 million people filed their tax returns for the tax year 2017 till due date and the remaining filing was done after the due date.

Officials said amendment to Section 214E, introduced through the Finance Supplementary Act, 2018 by the present government, was also under consideration.

This section was introduced to dispose of cases

selected for audit under deleted Section 214D related to

late filing of returns. The latest provision attracted huge criticism.

The government withdrew the audit of salary persons who were selected automatically. However, audit of large number of cases of corporate and business persons was still in progress.

Tax practitioners said both the provisions were very harsh in nature and would not help broaden the tax base.

“If a person is not allowed to appear in ATL, then why he would be interested in return filing after due date,” a tax lawyer said.

FBR officials said the provision, regarding automatic selection of audit, was deleted through the Finance Act, 2018, but another section was unnecessarily introduced through the supplementary act.