FBR withdraws mandatory requirement

KARACHI: The Federal Board of Revenue (FBR) has withdrawn the mandatory requirement of income return filing for the tax year 2014 by individuals even in those cases where refunds have been claimed.
The FBR issued notification dated July 24, amending the previous notification of 2009, which stated that from the tax year 2009 onwards, wherever the refund of tax is claimed in a non-company case, the income tax return will be filed electronically, and in all cases, whether relating to a company or a non-company, electronic filing of refund application as prescribed in the Income Tax Rules 2002.
Experts on Saturday said the tax authorities have relaxed the condition after the protest from the trade community against imposition of withholding tax on banking transactions that was only for non-filers.
Dr Ikramul Haq, a leading tax consultant, said that the condition has been relaxed for improving the return filing for the tax year 2014 and facilitate the non-filers, who were complaining that they were facing difficulties in return through online portal of the FBR.
In 2014, the federal government had created distinction between filers and non-filers and imposed higher rate on non-filers to compel them to file income tax returns. It was decided to update Active Taxpayers List (ATL) every month to update the status of filers of income tax returns. The purpose of the change was to increase the cost of doing business for those who are not paying taxes. Further in the budget 2015/16, the gap was increased between filers and non-filers in terms of withholding tax payment. A new section was also introduced, under which the withholding tax is applicable on all non-cash banking transactions and was only for non-filers.
After the announcement of the budget on June 3, the non-filers throng to file their returns for the tax year 2014 and it was witnessed that the FBR received around 22,000 returns in the last month of 2014/15.
The protesting trade community has complained to the authorities that they were willing to file returns, but due to complications in the online forms with several provisions of withholding taxes it was difficult for them to file the return.
Dr Haq said that by amending the tax rules, a taxpayer can file manual income tax return by visiting any tax department.
After receiving the return, it will be the responsibility of the tax department or facilitation centre to update in the FBR database to make the taxpayer part of ATL, he added.
He said that only those who are in the ATL would be able to avoid higher tax rate on non-filers.