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!

FBR logs 120,000 tax returns amid virus lockdown

KARACHI: The Federal Board of Revenue (FBR) has received around 120,000 income tax returns amid an unprecedented sluggishness in business and commercial activities due to the steps taken to stop the virus outbreak since March.

The FBR’s active taxpayers list (ATL) for the tax year 2019 showed that its members increased to 2.65 million from 2.53 million between May 24 and March 1.

The FBR updates ATL every week and on an average the revenue body receives around 20,000 returns per week. However, sources said the number of financial transactions had fallen drastically due to lockdown in the country.

Additional 120,000 income tax returns were filed after the due date of February this year.

Taking cues from global reaction to the pandemic, lockdown in Pakistan only partially eased after spinning around almost all aspects of socioeconomic life for two months, giving an abrupt shock of transition to the country that was already reeling under depressing dents of stabilisation.

As per the law, it was mandatory for individuals, association of persons and corporate entities to file annual returns to avail concessional withholding tax on certain transactions.

However, if an individual files return after the due date he or she is required to pay surcharge to appear on ATL besides paying the late filing penalty.

Also, a legal change, through Finance Act, 2019, compelled the filing of returns. That introduced a tenth schedule into the Income Tax Ordinance, 2001 under which an individual not appearing on the ATL would be bound to pay 100 percent additional withholding tax on certain financial transactions.

A senior FBR official said such tax regime created a misconception that a non-filer could go scot-free by choosing not to file income tax return. The measure was meant to increase the number of filers, however over time the focus was shifted to raising additional revenue only.

“The measure had not achieved the desired results as the regime did not provide for any legal framework to ensure filing of returns by such non-filers,” the official said. “In order to remove the aforesaid misconception, the concept and the term of ‘non-filer’ was abolished from the statute,” the official added.

The FBR was eyeing five million return filers in the next couple of years, where the tax target for the current fiscal year was revised multiple times at Rs3.9 trillion to bring it at par with the last fiscal year’s actual level of collection.

The revenue body recently estimated an impending revenue loss of Rs300 billion to Rs400 billion in the first quarter (July-September) of the next fiscal year, orating its challenge of hitting an ambitious target of Rs5.1 trillion for FY2021, envisaged by the International Monetary Fund under a loan reforms program.