Return filers to miss tax incentive without updating information

KARACHI: Many taxpayers may not avail reduced rate of income tax while making various transactions despite filing their annual returns and being included in the latest active taxpayers list (ATL), sources said on Tuesday.

Such taxpayers may only be able to avail reduced rates of income tax after providing complete personal details to the tax authorities, a senior official at Regional Tax Office (RTO)-II Karachi said.

The official said all existing persons who are enrolled on the FBR’s official web portal IRIS are required to update their personal details by December 31, 2020.

The official said the taxpayers who filed their income tax returns for tax year 2019 and were included in the ATL 2019 would be able to retain their names in the list after updating their profile. The ATL 2019 will remain applicable till February 28, 2021.

As per the new condition taxpayers are required to update their profile at the FBR web portal by providing information of bank accounts, utility connections and business premises.

The number of active taxpayers for tax year 2019 has increased to 2.74 million till July 26, 2020.

Under the income tax laws the authorities have granted reduced rates of withholding tax on various transactions to those persons who have filed their annual returns by the due date prescribed by the FBR. Persons who filed their annual income returns by due date are only eligible for appearance on the ATL.

The existing ATL will expire on February 28, 2021 and the FBR shall launch ATL – 2020 on March 01, 2020.

The FBR official said a taxpayer’s profile may be updated on or before December, 2020 in case of persons registered under Section 181 of Income Tax Ordinance, 2020 before September 30, 2020. In case the person is not registered under Section 181 before September 30, 2020, he is required to update his profile within 90 days of registration. According to the latest changes to Income Tax Ordinance, 2001: “Where a person fails to furnish or update a taxpayer’s profile within the due date or time period specified in sub-section (3) of section 114A or within the date as extended by the Board under section 214A, such person shall not be included in the active taxpayers’ list for the latest tax year ending prior to the aforesaid due date or extended date.”

The law further added: “Provided that without prejudice to any other liability under this Ordinance, such person shall be included in the active taxpayers’ list upon filing the taxpayer’s profile after the due date or extended date, if the person pays surcharge at rupees—(a) twenty thousand in case of a company; (b) ten thousand in case of an association of persons; and (c) one thousand in case of an individual.”

The official further said the FBR also prescribed a penalty for persons who failed to update their profit by the given date. The FBR shall impose Rs2,500 for each day of default from due date for updating profile subject to minimum penalty of Rs10,000.