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Filer and Non-Filer | Taxation in Pakistan

Filer and Non-Filer | Taxation in Pakistan

People ask me what is a filer and non-filer in Pakistan. Who is called a filer in Pakistan? How to become a tax filer? Why become a filer? What are the benefits of becoming a filer? What are the disadvantages of being a non-filer? Concept and procedure of taxation in Pakistan. In this article, I shall try to provide all the detailed answers to their questions as well as for the information of the general public.

Filer and Non-Filer

What is a filer and non-filer in Pakistan?

FBR introduced a withholding tax under the Income Tax Ordinance 2001 for non-filers with a double withholding rate to differentiate between filer and non-filer in Pakistan

What is Filer?

Filers are individuals that appear on the list of “Active Taxpayers” that is compiled by the Federal Revenue Service. To appear on the list of Active Taxpayers (which is shortly called ATL) every taxpayer has to submit his annual income tax return through FBR’s online portal IRIS (https://iris.fbr.gov.pk/public/txplogin.xhtml). 

What is Non-Filer?

Non-filers are taxpayers who do not have themselves got registered with the Federal Bureau of Revenue (FBR) and do not have an NTN or even they are registered with the FBR and have their valid NTN but do not file annual income tax returns.

Who is called a Tax Filer in Pakistan?

As already discussed above, filers are individuals who appear on the IRS’s list of “Active Taxpayers.” All taxpayers must file their annual income tax returns through FBR’s online portal IRIS in order to appear on this list. Due to annual tax filing of tax returns, FBR considers them a filer.

Who is called a Non Filer in Pakistan?

Non-Filers are the persons who do not register themselves with the FBR and thus they don’t have their NTN numbers or they have their NTN numbers but do not pay their income tax and also do not file their annual income tax returns. Because of non-filing of tax returns, FBR calls them non-filers.

Why does FBR differentiate between a Filer and a non-filer?

The government of Pakistan differentiates between the categories of tax filer and tax non-filer in order to increase tax revenue. Additionally, in order to penalize those who do not file their income tax returns, a higher tax was imposed on non-filers by the Finance Act 2014. The tax on non-filers is being tightened every year to force them to become filers.

Why to become a Filer?

Do you want to know what the benefits of becoming a filer are? There are several benefits for becoming a filer. A few of them are the following:

  • There is a reduction (usually 50%) in the withholding tax deduction for filers
  • Filers may import and purchase vehicles without restriction.
  • Property can be purchased by filers without restriction.
  • Prize bonds are taxed at a lower rate.
  • Taxes on dividends are imposed on filers at a lower rate.

 

What are the disadvantages of being a Non-Filer?

As we discussed earlier about filers and non-filers, there are lots of disadvantages for being a non-filer. They are listed below:

  • In accordance with the Finance Bill – 2018, non-filers will no longer be able to purchase or import motor vehicles, and local carmakers have already implemented and notified the ban.
  • Non-filers are prohibited from purchasing a property worth more than Rs 1 lakh. 
  • Non-filers pay higher withholding taxes.
  • For non-filers, prize bonds are taxed at a higher rate.
  • A non-filer’s dividend is taxed at a higher rate.
  • Vehicle registration rates are higher due to taxes on tokens.

Due to today’s IT facilities, becoming a filer is no longer as difficult as it once was. As part of its efforts to make filing tax returns easier, the FBR has introduced a number of facilities to help people. The National Tax Number is required for registering for an ATL or filing a tax return. The NTN can be registered without visiting a tax office at https://iris.fbr.gov.pk.

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