Can't connect right now! retry

add The News to homescreen

tap to bring up your browser menu and select 'Add to homescreen' to pin the The News web app

Got it!

add The News to homescreen

tap to bring up your browser menu and select 'Add to homescreen' to pin the The News web app

Got it!
June 14, 2019

FBR may lose 200,000 returns filers on increase in income threshold


June 14, 2019

KARACHI: The Federal Board of Revenue (FBR) is likely to lose around 150,000 to 200,000 income tax returns as the new budget proposed an increase in the threshold of taxable income for salaried individuals, experts said on Thursday.

Tax officials, however, denied any such impact on returns filing.

Tax experts said salaried individuals account for around 70 percent in total income tax returns filing.

Though the lower income group does not file returns due to lack of awareness, there are estimated 150,000 to 200,000 individuals from the group, they said.

Tax rates for both salaried and non-salaried individuals were drastically reduced in the Finance Act 2018. Previously, the threshold of taxable income was Rs400,000. Through the Finance Act, 2018, the threshold was substantially increased threefold to Rs1.2 million, which resulted in a huge shortfall of approximately Rs80 billion in revenue collection.

The threshold of taxable income is generally a proportion of the per capita income of a country and such significant increase is unprecedented.

The Finance Bill 2019 therefore proposed that the threshold of taxable income might be revised and fixed at Rs600,000 for salaried individuals and Rs.400,000 for non-salaried individuals.

The increase was proposed, considering the inflationary pressure. Previously, the tax exempt income was increased to Rs400,000 from Rs350,000 through Finance Act 2012.

Under the Income Tax Ordinance 2001, the individuals having taxable income above threshold income are mandatorily required to file income tax returns.

Therefore, with the increase of threshold income the individuals earning between Rs400,000 to Rs600,000 would not be required to file their returns.

A senior Federal Board of Revenue’s official said though the individuals having below taxable income are not required to file income tax returns individuals having above Rs400,000 salary income would be required to file their returns for more than two tax years.

The official said the FBR would not face any big shortfall in revenue and returns filing. “The individuals having income between Rs400,000 to Rs600,000 usually do not file their returns and the tax impact on their income is also very low.”

The official said through Finance Bill 2019 the government had take measures to force people to file their income tax returns.

These measures are likely to boost the returns filing by one million.

“So the decline in returns filing due to change in threshold income is not serious,” the official added.

The official said the finance bill ensures that individuals having taxable income should be part of active taxpayers list.

The official further said the bill proposed arrest of habitual non-compliant taxpayers.

The bill also proposed to facilitate salaried individuals in filing of returns and the statutory returns filing date has been extended to September 30 from existing August 31.

The official said every year the FBR extends the date for filing income tax returns.

However, the practice would be stopped with the proposed amendment, the official added.

Topstory minus plus

Opinion minus plus

Newspost minus plus

Editorial minus plus

National minus plus

World minus plus

Sports minus plus

Business minus plus

Karachi minus plus

Lahore minus plus

Islamabad minus plus

Peshawar minus plus