Tax is a contribution to the revenue of the state which is compulsory individuals. It is imposed by the government on the individual’s income, business profits, buying goods and transactions. It is a source of public expenditures and facilitates the government in building better roads, schools, hospitals and providing other public services. If all individuals pay their right share of taxes it adds to the prosperity of the country.
This further helps to welcome investors and a better job market in the country. A Tax filer is a person who is a regular tax-payer and his name is listed on the Federal Board of Revenue’s list of active Tax filers. This list is maintained by FBR to keep a check on Withholding tax agent to apply taxes on filers and non-filers. Unfortunately, in Pakistan many people are quite illiterate when it comes to becoming a Tax Filer.
Most people sincerely want to contribute their share through taxes as good citizens but often refrain considering the process tedious, or considering that their taxes are already being deducted through other means. Nevertheless, they are unaware that being a non-filer they are paying more tax.
Becoming a Tax filer in Pakistan makes you a rightful citizen who is following his duties as well as saves you extra money deducted being a non-filer. Tax Filer basically gives the government a detail of his income and assets and these tax returns benefit him and the government. Below is a guideline which you can follow to make the process hassle-free:
First and the fore-most thing is to check whether you fulfill the criteria of FBR for being a Tax Filer in Pakistan. For this you will get key information from the Federal Board of Revenue’s (FBR) SRO No. 981(I) 2017. If your income does not exceed Rs400,000 annually, you are not applicable to pay income tax. However, for maximum transparency, you still need to file your tax returns with the correct details. If your annual income is more than Rs400,000 you are liable to pay income tax.
You can now register yourself with FBR either manually or online. To register you need to provide your NTN number, your phone number and your CNIC on the form provided. You may then submit a copy of the form manually to the FBR Office or submit it online. As these details cannot be revised so the forms must be filled with utmost care.
When the Income Tax Return is submitted alongwith Wealth Statement, you will become automatically Filer when system will update all records.
To become a Tax filer, you first need to have a valid NTN (National Tax Number). Apply for NTN and get your NTN number.
You need to make an estimate of your income. For a salaried person the employer gives a detail of tax deduction from the salary. For a businessman, an estimate of profit is made by deducting sales and expenditures.
You must collect a certificate of collection and deduction of your tax. All withholding tax payable on banking transactions, mobile and PTCL bills, sale and purchase of vehicles & property and are adjustable. Request Certificate of Collection and Deduction of Tax from your bank, mobile phone company and PTCL offices. You can then sum up the total amount of tax deducted on various transactions.
A clear estimate of all your assets need to be made. These assets might be a part of your inheritance, a gift or purchased by your own resource. Assets include cars, plots, houses, apartments, household items, jewelry, prize bonds, foreign currency, cash in hand and bank balances. The rate of all these assets is taken at present.
You then need to make an estimate of your personal expenditures. This is always a rough estimate of your electricity, water and gas bills, house rent, vehicle fuel expense, travelling, taxes, and other household expenses.
Make a compilation of your wealth resources by reconciling your current income or profit or other receipts, e.g. foreign remittance, family contribution, inheritance, gifts, etc. against your personal expenses and calculate an increase or decrease in wealth during the tax year.
Becoming a Tax Filer in Pakistan may end up giving you more benefit than being Non Filer. FBR has now greatly modified its process for the ease of citizens. Register yourself as Tax Filer today and contribute to the progress of Pakistan!