Who is required to be a filer in Pakistan? To understand who is required to become a filer, it is first important to know what is meant by a “filer”. A filer is a person who is registered with the FBR and files his tax return before the due date.
A tax return has two parts:
One part in which information related to income is entered.
The second part which includes the wealth statement, i.e. the details of all assets and liabilities.
What is the wealth Statement?
The following information is included in the wealth statement.
Assets: such as bank balance, property, vehicles, loans given or gifts received, etc.
Liabilities: such as debts, bank loans or other obligations.
In summary, your total income is shown in the income tax return, whether it is from salary, business, property, bank profit or any other source of income. Along with this, details of all your assets and liabilities are also mandatory.
The purpose of collecting all this information is so that the FBR has a clear record of what your annual income and expenses and what is the value of your assets.
Who is required to be a filer in Pakistan?
Companies:
All types of companies registered under the Companies Act are required to file annual returns, even if they have not made any profit or have not done any business at all.
Generally, people register a company but do not start a business and do not carry out any activity, but despite this, it is mandatory to file returns.
Currently, every company incorporated in Pakistan gets its NTN automatically generated and registered with the FBR. There is no need to submit a separate application for this.
Minimum Taxable Income
If a person’s annual income is less than Rs 6 lakh, which is the maximum limit above which taxes are not applicable, it is still mandatory for taxpayers to file annual returns, even if their income is less than the taxable amount.
Own an Asset Land or Vehicle
He is the owner of a plot or flat that is 500 square yards or 15 Marla and is located in a municipal committee or urban area, then it is still mandatory to submit returns.
Similarly, if a taxpayer owns a vehicle with an engine capacity of more than 1000 cc
NTN Holder
If anyone has obtained a National Tax Number (NTN) and is registered with the FBR, then he is also required to file annual return, even if he has no earning.
Commercial or Industrial Electricity Connection
If a person has installed a commercial or industrial electricity connection and his annual electricity bill is more than five lakh rupees, then in this case too, it is mandatory to file a return.
Cases in Which FBR May Demand a Person to Become a Filer
The Commissioner of FBR may issue a notice to any person to file a return if he is of the opinion that the person is required to submit a return but is not doing so. The notice period may be 30 days or less.
The notice may ask the taxpayer to file returns for the last five years. However, if the person is a non-filer i.e. has not been issued an NTN, then this period will be 10 years instead of five years. Moreover, if the person is in the opinion of the Commissioner, he has any foreign assets or foreign income, then this limit of five or ten years will not apply to him.
Own a Foreign Asset or Have Foreign Income
If a taxpayer is one whose foreign income is not less than US$ 10,000 or has foreign assets worth not less than US$ 100,000, then he shall submit a statement of his foreign revenue and assets, which will include all his foreign assets and liabilities as on the last day of the fiscal year.
Moreover, if any foreign asset is transferred to another person during the financial year and a price is received in return, then a full description of this foreign revenue and the expenses incurred during the financial year must also be filed.
Final Tax Regime
If a taxpayer’s income falls under the final tax regime, it means that the taxes deducted at source is his final tax liability and the FBR cannot impose any further. However, the obligation to file annual returns does not end even then.
Who is not required to be a Filer in Pakistan?
However, in some cases, there is no need to file a tax return or become a filer regardless of their financial status such as:
A widow.
An orphan child under the age of 25.
A disabled person.
If a non-resident person, he/she may wish to buy or sell property.
When it’s not necessary to be a filer How to get benefits without being a filer?
Now the question is, if it is not mandatory for some people to become filers as per the law, how can they save their taxes.
The law stipulates a procedure for this, whereby the withholding agent who is required to deduct tax submits an application to the FBR (which is available online on the IRIS portal). This application contains all the details of the person concerned and it is clarified that he is not required to become a filer. Since the responsibility of deducting tax lies with the agent, if the deduction is not made or is reduced, the agent will have to pay this amount himself.
Example
If a widow has money in her bank account, or an orphan has land or money in his name, then according to the law, it is not necessary for him to become a filer. But the bank considers him a non-filer and deducts more tax. In this case, the bank or institution will send an application to the FBR.
The FBR must decide within 30 days. If it does not decide within the stipulated time, the system will automatically issue an order and it will be returned to the taxpayer. But this process takes time and can take at least a month.
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