ISLAMABAD: The Federal Board of Revenue (FBR) has received only 580,000 annual income tax returns from individuals and companies by the expiry of an extended deadline, which is less than half of the returns filed in tax year 2016.
The original date for filing tax returns for individuals, association of persons (AOPs) and companies was September 30 that Finance Minister Ishaq Dar extended for one month in the hope of matching last year’s performance.
As many as 1.21 million people, AOPs and companies had filed income tax returns in tax year 2016, according to the Tax Directory 2016 that the finance minister unveiled in August this year.
Till October 31, 558,000 individuals filed income tax returns, which were half the number of returns filed in the previous year, according to FBR’s statistics.
Apart from these, only 690 companies filed income tax returns by the end of the deadline. One of the reasons for the low number is that many companies complete their financial year on December 31. For tax year 2017, over 21,000 AOPs filed the returns. Compared to that, 79,800 companies and AOPs had filed tax returns last year.
Under the law, all people are bound to file income tax returns after the close of a fiscal year. Pakistan has one of the lowest tax-to-GDP ratios in the world. The ratio remained at only 10.6% at the end of last fiscal year 2016-17.
In Pakistan, 4.3 million people are registered National Tax Number (NTN) holders and the FBR could not do anything about those people who are not filing the returns.
The government has also set different withholding and sales tax rates for filers and non-filers of tax returns. There are 71 types of withholding taxes that cover almost every possible transaction and expenditure. These taxes have now become an easy source of earnings for the FBR including other indirect taxes, contributing about 92.4% to the total collection.
