FBR to offset exit of 0.52 million returns filers after tax exemption
KARACHI: The Federal Board of Revenue (FBR) is all set to offset a possible exit of 0.52 million returns filers from the net after the implementation of a tax exemption on certain income group from July 1, officials said on Saturday.
“About 0.52 million income tax returns will be lost after the implementation of new tax slabs for salaried class and individuals from the next fiscal year,” an official at FBR said. “In order to offset the exit the FBR will focus on withholding tax transactions made by non-filers of income tax returns.”
Government unveiled five-point tax amnesty scheme that announced tax exemption for individuals whose annual income is up to Rs1.2 million. The tax slabs include five percent on the income between Rs1,200,001 and Rs2,400,000; 10 percent on income between Rs2,400,001 and Rs4,800,000 and the highest slab is fixed at 15 percent on income of more than Rs4.8 million.
Though individuals with annual income below Rs1.2 million will not be required to file returns, but they would need to file returns in order to make adjustment on withholding tax deductions on electricity and telephone bills and claim refunds.
Adviser to Prime Minister on Finance, Revenue and Economic Affairs Miftah Ismail said the tax reduction would be for salaried as well as business individuals. “The new threshold is applicable on all individuals, salaried or self-employed,” Ismail wrote on Twitter. “It will come into effect on July 1, 2018.”
FBR officials said around 1.3 million income tax returns were filed for the tax year of 2017. Salaried individuals would be required to file returns on the basis of old threshold for the tax year 2018.
“So, there will be no impact rather an increase in number of returns filers,” an official said. “However, the changes will apply on the individuals filing income tax returns for the tax year 2019 and in that year the number of returns will fall.”
Government, in the new tax scheme, said only return filers would be entitled to purchase properties amounting above four million rupees, while individuals on active taxpayers list would be able to hold foreign currency account.
“These measures will automatically increase numbers of returns filing,” a senior FBR official said. The official said government would also increase use of modern technology to enforce returns filings by individuals having taxable income.
The official said units to broaden tax base have already been established in the major cities to tap potential taxpayers. The notices have been sent to the potential taxpayers on the basis of transactions made in sale/purchase of properties, purchase of motor cars and foreign travelling fares.