Publish: Jan 15 - 2022

Filer and Non-Filer | Difference

There is a lot of difference between a filer and a non-filer in the eyes of law. I have to answer many questions from clients, such as: what is an income tax filer and a non-filer in Pakistan. What is an income tax filer in Pakistan? What is the process for becoming a tax filer in Pakistan? Why should one become a filer? How can one benefit from becoming a filer? If one does not file, what are the consequences? What is the taxation system in Pakistan and how does it work? The purpose of this article is to answer all the detailed questions they asked and to provide information for the general public.

With today’s technology, becoming a filer isn’t as difficult as it used to be. In an effort to simplify filing tax returns, the FBR has introduced a number of programs and services. In order to get your name in the ATL or to file an annual income tax return, a National Tax Number is required. You can register the NTN online at https://iris.fbr.gov.pk without visiting a tax office.

Filer and Non-Filer difference

What do the terms “an income tax filer and a non-filer” mean in Pakistan?

Under the Income Tax Ordinance 2001, the FBR introduced a two-tiered withholding tax for non-filers with a double withholding rate to differentiate between filers and non-filers in Pakistan.

What distinguishes a Filer from a Non-filer at FBR?

In order to increase tax revenues, the government of Pakistan differentiates between categories of taxpayers and non-tax payers. Additionally, the Finance Act 2014 penalized non-filers with a higher tax in order to penalize them for not filing their taxes. Non-filers are subject to increased taxes every year to force them to file.

Who is an income tax filer?

Filers are those individuals listed on the “Active Taxpayer” list compiled by the IRS. Every taxpayer has to submit his annual income tax return through FBR’s online portal IRIS (https://iris.fbr.gov.pk/public/txplogin.xhtml) in order to appear on the list of Active Taxpayers (which is known as ATL). 

Who is a Non-Filer?

A non-filer is a taxpayer who is neither registered with the Federal Bureau of Revenue (FBR) nor has a valid NTN, or whichever is the case if they are registered with the FBR and have a valid NTN as well as an income tax return, but do not file yearly tax returns.

What does it mean to be a tax filer in Pakistan?

The IRS declares filers as taxpayers who appear on its list of “Active Taxpayers.” To appear on this list, tax filers must submit their annual income tax returns via FBR’s online portal IRIS. FBR considers them as a filer because they file tax returns on an annual basis.

Who in Pakistan is called a non-filer?

A non-filer is an individual who has not registered himself with the FBR and thus does not have an NTN number or has an NTN number but does not pay his income tax and does not file his annual income tax return. The FBR also refers to them as non-filers because of their failure to file tax returns.

Why should I become a Filer?

I want to let you know how becoming a filer benefits you. The benefits of becoming a filer include the following. A few of them are the following:

1. Filers are allowed to purchase property without restrictions.
2. There is a lower tax rate on prize bonds winning.
3. Withholding tax deductions are usually reduced by 50% for filers.
4. Importing and purchasing vehicles is not restricted to filers.
5. On filers, dividend taxes are lower.

Why would you avoid being a non-filer?

There are many disadvantages to being a non-filer, as I discussed earlier. Listed below are some of them:

  1. Non-filers will no longer be able to purchase or import motor vehicles under the Finance Bill – 2018, and local automakers have already implemented the ban.
  2. The purchase of a property worth more than Rs 1 lakh is prohibited for non-filers. 
  3. Withholding taxes are higher for non-filers.
  4. Tax rates on prize bonds are higher for non-filers.
  5. Dividends received by non-filers are taxed at a higher rate.
  6. Due to taxes on tokens, registration rates for vehicles are higher on non-filers.

To summarize the above discussion, I would like to tell you that a person earning a salary over Rs. 600,000 or a business earning a net profit over Rs. 400,000 should be registered with the FBR and file annual income tax return every year, on or before 30th September. 

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