A large part of the total population of Pakistan is based on employees and entrepreneurs. Although the country is home to millions of professionals and business people, and the country’s tax rate is shockingly low. Why are all these people not Tax filer? Well, the main reason for the tax gap phenomenon is a lack of awareness. There are numerous benefits of being a tax filer in Pakistan that most of these Pakistani self-employed and employees are unaware of.
Mostly the Pakistani population belongs to employment and entrepreneurship. However, there are millions of professionals and traders but the country`s tax is astonishingly slow. Due to the lack of awareness, many people are not tax filer or attention to paying the tax. There are many benefits tax filer in Pakistan because the Pakistani are self-employed and on the other hand employees are unaware of the tax.
The monies collected from the taxpayers in Pakistan are also one of the largest sources of revenue for the state’s economy. In addition, it is the lawful duty of every Pakistani citizen to pay taxes that are levied on their wealth. Serious efforts like punishing non-filers of tax returns and providing benefits of being a tax filer in Pakistan are concerted jointly by the Government of Pakistan and the Federal Board of Revenue (FBR) to bring more and more people into the tax net.
One of the largest sources of revenue for the economic state is the money that is collected from the tax filer in Pakistan. Additionally, the taxes that are paid by the Pakistani citizens is imposed on their wealth. To take serious actions against the non-filers of the tax and to provide the benefits of being a tax-filers in Pakistan is concerted jointly by the government of Pakistan and the Federal Board of Revenue(FBR) to aware or bring more and more people into the tax net.
After filing tax returns became mandatory for employees and businessmen, FBR Pakistan started sending letters to individuals instructing them to register for a national tax number and have their names on the Active Taxpayers List (ATL).
FBR Pakistan has started to send letters to individuals for instructing them to register themself for a national tax filer number and their names on the Active Taxpayers List (ATL). Moreover, filing tax returns became mandatory for employees and traders.
GOVERNMENT’S TAX AMNESTY SCHEME 2019:
In 2019 self amnesty program was introduced by the Pakistani government. The government’s 2019 amnesty program covers a range of assets from real estate to undisclosed sales. In addition, a late payment penalty of between 10% and 40% will be levied on late payments until the end of June 2020, giving individuals ample time to disclose their assets and become taxpayers.
WHO SHOULD FILE TAX RETURNS?
In light of Pakistan tax law, all individuals with an annual income of PKR 4 lakh or more are required to file their tax returns annually. The National Tax Number, better known as NTN, is a special number assigned to every taxpayer by the Government of Pakistan. Here’s how the Federal Board of Revenue (FBR) put you on its list of active taxpayers.
Under the tax law of Pakistan, everyone has to file their tax return annually with an income of PKR 4 lakh or more. The organization The National Tax Number that is known as NTN assigns the special numbers to the taxpayers by the Pakistani government.
After registering your name in ATL, you get the privilege of paying lower taxes on financial transactions, including various types of banking transactions, sale/purchase of real estate and vehicles, etc.
LIST OF BENEFITS OF BEING A TAX FILER IN PAKISTAN:
Would you like to start filing tax returns? do it right now Taxpayers in Pakistan enjoy more tax breaks than non-filers. So let’s take a look at the list of benefits of being a taxpayer in Pakistan.
Taxpayers only have to pay half the withholding tax compared to the tax paid by non-filers.
A non-filer is prohibited from owning a property valued at over PKR 50 lakh, while persons who regularly file tax returns can purchase any property.
A tax filer can purchase any property as compared to the non-filer who is prohibited from buying any property that is valued over PKR 50 Lakh.
Importers of raw materials who are not importers would have to pay 8% on total imports, while taxpayer importers would have to pay 5.5% on raw material imports.
Taxpayer importers have to pay 5.5 % on raw materials while the non-filers have to pay 8% on total imports.
Payment of a 9% duty on commercial exports is mandatory for exporters in Pakistan who are not filers. On the other hand, taxpayers are expected to pay only a 6% duty on their commercial exports.
Taxpayers are advised to pay only a 6% duty on their commercial export while the non-filers have to pay a 9% duty on the commercial export.
Non-filers’ dividends (corporate profits) are taxed at a total of 20%, versus the 15% tax rate for tax filers.
As for the taxes levied on bank and savings scheme profits, a non-filer has to pay 15% tax versus the 10% tax paid by active taxpayers in Pakistan.
Taxpayers pay only 15% tax on winning prize money through the prize bond compared to 25% tax paid by non-taxpayers.
Individuals who regularly file income tax returns only have to pay 1% of land transfer tax, versus the 2% tax paid by property owners who do not file tax returns.
Regardless of whether it is the auction by the government or some other private entity, taxpayers only pay 10% tax versus 15% tax paid by non-taxpayers in Pakistan.
Difference in Applicable Taxes for Filers and Non-Filers:
| Bank Transaction | Non-Filers | Filers |
| Cash Withdrawal Above PKR 50,000 | 0.60% | 0.30% |
| Bank Transfer, Cheque, Purschase Order Exceeding PKR 50,000 | 0.40% | 0% |
| Purchase of Vehicle | Non-Filers | Filers |
| Under 851 CC | PKR 10,000 | PKR 10,000 |
| 851 – 1000 CC | PKR 25,000 | PKR 20,000 |
| 1001 – 1300 CC | PKR 40,000 | PKR 30,000 |
| 1301 – 1600 CC | PKR 1,00,000 | PKR 50,000 |
| Registration of Vehicle | Non-Filer | Filer |
| Under 851 CC | PKR 10,000 | PKR 10,000 |
| 851 – 1000 CC | PKR 25,000 | PKR 25,000 |
| 1001 – 1300 CC | PKR 40,000 | PKR 30,000 |
| 1301 – 1600 CC | PKR 100,000 | PKR 50,000 |
| Transfer of Vehicle’s Registration | Non-Filer | Filer |
| Under 851 CC | PKR 5,000 | PKR 0 |
| 851 – 1000 CC | PKR 15,000 | PKR 5,000 |
| 1001 – 1300 CC | PKR 25,000 | PKR 7,500 |
| 1301 – 1600 CC | PKR 65,000 | PKR 12,500 |
In case, you also want to register for NTN and include your name in FBR’s Active Taxpayers list, then here is everything you need to know about the process of becoming a tax filer in Pakistan.
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