NTN Registration
One of the 7 Essential Tips Before Filing Your First Tax Return in Pakistan is to verify your NTN (National Tax Number) registration. The process is simple: visit the FBR website and check your NTN status online. For instance, if you registered in 2023, you only need to file taxes for the financial year 2023; filing for earlier years is unnecessary. Many individuals are unaware that their NTN has already been issued, especially if they work at an organization that handles registration on their behalf. To avoid confusion, please verify your NTN status first.
MIS Details
FBR maintains a lot of information about you. They have provided a way for you to check this data. Visit their website, log into your online portal in IRIS, and click on the “MIS” and “Malumat” tabs. There, you will find all the data that FBR holds about you. This will give you a clear picture of what assets and other details are recorded under your name in the FBR’s system.FBR has access to your bank account data, expenses, property purchases, foreign travel records, and credit card details. Reconcile this information with your records to determine what data is correct and what is not.
Before Filing Your Tax Return
The third of the 7 Essential Tips Before Filing Your First Tax Return in Pakistan: Keep the data for the last five years in an Excel sheet or another file. The advantage of this is that if the FBR issues you a notice later, you will have all the necessary paperwork, which will help you avoid any problems. For example, if you declared 5 million in 2023, the FBR may ask where that amount came from. In that case, you will have the workings from the past five to six years to support your position, showing how you accumulated that amount over time.
Asset Details
The fourth of 7 Essential Tips Before Filing Your First Tax Return in Pakistan: If you are filing your return for the first time, you must report all your assets accurately. If you have purchased any property, vehicle, gold, or other items, report them at their correct value. In the case of property, report it at the price you paid at the time of purchase. If you inherited the property and its value is not available, but you paid a transfer fee, then report it at that value. If that too is not available, report it at zero (0). Prefer the first two options, and if the information is unavailable, it is acceptable to report a null value.
Reporting of Gold
The fifth of 7 Essential Tips Before Filing Your First Tax Return in Pakistan, There is often confusion regarding gold, and many people declare it at zero value, which is incorrect. For example, if you declare one tola of gold jewellery at zero value and later sell it for 300,000 PKR, the entire amount will be considered a capital gain and fully taxable. But if you originally purchased it for 100,000 PKR, only the gain of 200,000 PKR will be taxed. So always report the price you paid.
Expenses and Assets When Filing for the First Time
The sixth of the 7 Essential Tips Before Filing Your First Tax Return in Pakistan: Generally, people think that when filing for the first time, they can show as much savings as they want. The idea is that if their wealth statement reflects higher assets, it will benefit them in the future. If they acquire a new asset, they can claim it was purchased by selling an older one. This is a major misconception in people’s minds. They believe that by initially declaring higher assets, they can later build a new house or buy new property and simply delete the old assets and add the new ones to avoid any trouble with the FBR.
Declared a huge balance of cash in hand:
Another perception is to declare a large cash-in-hand amount, assuming no capital gain tax applies to cash. In the future, if a person acquires new assets, this cash can be used for that purpose when filing the wealth statement. However, the revenue department may question any mismatch between declared income, expenses, and assets. For instance, if your annual income is 600,000 and expenses are 400,000, your yearly savings are 200,000. How can you show a cash balance of 5 million if you claim it is your accumulated annual savings? In that case, you would have 5 million only after 25 years.
Supreme Court Ruling
There is a Supreme Court decision that whoever shows his balance will have to give proof of it, and if we have bought something new, we will have to give proof of it, and if we have sold something, we will have to give proof of it. For example, if you sell gold, you will have to give proof of it. Today, you know, all the authorities keep all the data with them, so if we send anything like this, we will need proof of it. Therefore, when filing your tax return for the first time, declare only those assets which you actually own—do not overstate your holdings.
Final Thoughts
Filing your first tax return in Pakistan requires thorough preparation and a clear understanding of applicable laws and regulations. Review your MIS details carefully to ensure accuracy. Maintain a five-year record of your income, expenses, and liabilities, and declare only those assets you truly own—at their correct values. Overstating asset values can lead to serious consequences. Always consult a qualified tax professional, as filing returns based solely on online tutorials often results in mistakes and complications.
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