Who Should File Income Tax Return in Pakistan 2026 | FBR Mandatory Filing
Who Should File Income Tax Return in Pakistan – Mandatory FBR Filing Criteria
Mandatory income tax return filing in Pakistan is governed by Section 114 of the Income Tax Ordinance 2001, which identifies specific individuals and entities required to declare their annual income to the Federal Board of Revenue. Failure to comply with these statutory requirements can lead to heavy penalties, the freezing of bank accounts, and exclusion from the Active Taxpayer List (ATL).
The Legal Mandate for Income Tax Return Filing
Under the prevailing tax laws of 2026, the question of who should file an income tax return in Pakistan is determined by both income levels and the ownership of specific assets. The Federal Board of Revenue has expanded the scope of mandatory filing to ensure a documented economy. As of Tax Year 2026, the basic taxable income threshold for salaried individuals remains at PKR 600,000, while for business individuals, it is PKR 400,000. If your annual earnings exceed these limits, you are legally bound to register for an NTN and submit your return.
However, income is not the only trigger. Many residents often ask, “Should I file an income tax return if my income is below the taxable limit?” The answer is yes if you own a motor vehicle above 1000cc, hold a commercial electricity connection with bills exceeding PKR 500,000, or own immovable property above 250 square yards in rating areas. For professional guidance on these specific triggers, our income tax return filing lawyers in Karachi can audit your financial profile to ensure you are not in default of FBR regulations.
Mandatory Filing Categories Under Section 114
Section 114 of the Income Tax Ordinance 2001 outlines the categories of persons required to furnish a return of income. Even if you have zero income for the year, you may still be required to file a “Nil Return” to maintain your status on the Active Taxpayer List.
1. Mandatory Filing Based on Legal Status
Certain entities must file a return regardless of their profit or loss. This includes all Companies (Private Limited, Public, or SMC-Private), every Association of Persons (AOP), and all registered Non-Profit Organizations (NPOs).
2. Mandatory Filing Based on Asset Ownership
Ownership of high-value assets is a primary signal for the FBR to track potential taxpayers. You must file if you:
- Own immovable property with a land area of 250 sq. yards or more (or any flat) in municipal limits.
- Own a motor vehicle with an engine capacity exceeding 1000cc.
- Are registered with any professional body (Pakistan Bar Council, PEC, PMDC, ICAP, etc.).
- Have an industrial or commercial electricity connection where the annual bill exceeds PKR 500,000.
3. Mandatory Filing for NTN Holders
If you have already obtained a National Tax Number (NTN), you are legally required to file an annual return until you formally cancel your registration. Many individuals who previously used professional company registration services forget that their business NTN carries an annual filing obligation, even if the business is currently dormant.
Comparison Table: Filing Thresholds and Criteria 2026
Category | Mandatory Filing Threshold | Key Trigger |
Salaried Individuals | PKR 600,000 / Year | Annual Salary & Allowances |
Business Individuals | PKR 400,000 / Year | Net Business Income |
Companies / AOPs | Always Mandatory | Legal Incorporation Status |
Vehicle Owners | Engine Capacity > 1000cc | Registration in Owner’s Name |
Property Owners | > 250 Sq. Yards | Immovable Property Ownership |
Professional Body Members | Always Mandatory | Membership (PEC, PMDC, PBC) |
The Consequences of Non-Filing
Failing to determine who should file an income tax return in Pakistan can lead to severe administrative actions. The FBR has the authority to issue notices under Section 114(4) and, in case of persistent default, can exercise powers under Section 114B to disconnect utility services (electricity and gas) or block mobile SIMs. Additionally, non-filers are subjected to higher withholding tax rates on almost every financial transaction, including bank profits and property sales.
To avoid these complications, we recommend a proactive approach to tax compliance. By utilizing expert FBR tax filing services, you can ensure your wealth statement and returns are reconciled accurately. This not only secures your place on the Active Taxpayer List but also provides you with the legal peace of mind required to grow your financial assets within the state’s regulatory framework.
Frequently Asked Questions
Who is required to file an income tax return in Pakistan?
Anyone with income above PKR 600k (Salaried) or PKR 400k (Business), owners of cars >1000cc, property owners >250 sq yards, and all registered companies.
Should I file a return if my income is below the limit?
Yes, if you own specific assets like a car or property, or if you want to become a “Filer” to save on withholding taxes.
Is NTN registration mandatory for filing?
Yes, you must have an NTN to access the FBR IRIS portal and submit your annual income tax return.
What is the penalty for not filing?
Penalties range from fixed fines (starting at PKR 40,000) to higher tax rates for non-filers and potential utility disconnections.
Do overseas Pakistanis need to file returns?
Overseas Pakistanis must file if they have Pakistan-source income (like rent or bank profit) or own property in Pakistan.
Can a student file an income tax return?
Yes, students can file a “Nil” return or declare income from freelance work to benefit from lower tax rates on vehicle registration.
Do I need to file a wealth statement?
Yes, every resident individual filing a return must also file a Wealth Statement (Form 116) to reconcile their assets and expenses.
What happens if I have an NTN but don’t file?
You will be marked as “Inactive” on the ATL and may receive a notice from the FBR for non-compliance.
Is filing mandatory for housewives?
Only if they own property/assets above the threshold or have taxable income from investments.
What is the deadline for filing in 2026?
The standard deadline for individuals is September 30th, unless an extension is officially notified by the FBR.
People Also Ask
How to check if I am mandatory to file?
Review your annual income and assets against Section 114 criteria or consult a tax lawyer for a professional audit.
Can I cancel my NTN if I am no longer earning?
You can apply for “Deregistration” or “Suspension” of NTN if you no longer meet the filing criteria and have no taxable income.
What is a Nil Return?
A Nil Return is a tax filing showing zero taxable income, used to maintain Filer status and legal compliance.
Do I need a lawyer to file my return?
While you can file yourself, a lawyer ensures your wealth reconciliation is correct and protects you from FBR audits.
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