What are the benefits of filing your tax return in time with FBR in Pakistan?

Following are the benefits of filing your tax return in time in Pakistan:

1.       In case you are doing business in Pakistan or earning taxable salary income or under the income tax law require to file your return, it will prevent you from any penalty or additional tax if you file your tax return within the stipulated time. Following persons are required to file their tax returns in Pakistan:

Who is required to file income tax return in Pakistan?

(a)        every company;]

(ab)       every person (other than a company) whose taxable income for the year exceeds Rs.400,000

(ac)        any non-profit organization or any welfare institution

 (b)      any person not covered by above categories but:

(i)       has been charged to tax in respect of any of the two preceding tax years;

(ii)      claims a loss carried forward under this Ordinance for a tax year;           

(iii)    owns immovable property with a land area of two hundred and fifty square yards or more or owns any flat located in areas falling within the municipal limits existing immediately before the commencement of Local Government laws in the provinces; or areas in a Cantonment; or the Islamabad Capital Territory

(iv)       owns immoveable property with a land area of five hundred square yards or more located in a rating area;]

(v)        owns a flat having covered area of two thousand square feet or more located in a rating area;]

(vi)       owns a motor vehicle having engine capacity above 1000 CC;

                                (vii)         has obtained National Tax Number

(viii)     is the holder of commercial or industrial connection of electricity where the amount of annual bill exceeds rupees five hundred thousand or

(ix) is a resident person] registered with any chamber of commerce and industry or any trade or business association or any market committee or any professional body including Pakistan Engineering Council, Pakistan Medical and Dental Council, Pakistan Bar Council or any Provincial Bar Council, Institute of Chartered Accountants of Pakistan or Institute of Cost and Management Accountants of Pakistan.]

2.                       Every individual whose income under the head ‘Income from business’ exceeds rupees three hundred thousand but does not exceed rupees four hundred thousand in a tax year is also required to furnish return of income from the tax year.

If you fall in any of the above category, you are legally bound to submit your tax return. In case the return is not submitted or submitted after the due date, the following penalties shall be chargeable.

Such person shall pay a penalty equal to 0.1% of the tax payable in respect of that tax year for each day of default subject to a maximum penalty of 50% of the tax payable provided that if the penalty worked out as aforesaid is less than twenty thousand rupees or no tax is payable for that tax year such person shall pay a penalty of twenty thousand rupees.

By filing your tax return, you not only protect yourself from levy of any penalty but also get the following benefits:

The capital gain tax on disposal of shares and securities shall be chargeable under the reduced rates as tabulated below:

Tax at import stage will be higher in the case of non-filer importer:

Rate of dividend in respect of non-filer will be 20% as against 12.5% in respect of filer taxpayer.

Rate of dividend in respect of non-filer will be 20% as against 12.5% in respect of filer taxpayer.

In case of supplies the rate for filer taxpayer is 4.5% and in case of non-filer tax is deductible @ 6.5%. For companies the rate shall be 4% and 6% respectively in cases of filer and non-filer.

The rate of tax to be deducted from a payment on services under section 153(1)(b) shall be —

            (i)    in the case of transport services, two per cent of the gross amount payable; or

                        (ii)         in the case of rendering of or providing of services, —

                                   

“(a) in case of a company, 8% of the gross amount payable, if the company is a filer and 12% if the company is anon-filer; and

(b)   in any other case, 10% of the gross amount payable, if the person is a filer and 15% if the person is a non-filer;

(a)     in respect of persons making payments to electronic and print media for advertising services,—

(i) in case of a filer, [1.5%] of the gross amount payable; and

(ii) in case of a non-filer, 12% of the gross amount payable, if the non-filer is a company and 15% if the non-filer is other than a company;”;]

         (3) The rate of tax to be deducted from a payment on account of contractual services referred to in clause (c) of sub-section (1) of section 153 shall be

                                “(i) 10% of the gross amount payable in case of sportspersons;

(ii) in case of a company, 7% of the gross amount payable, if the company is a filer and 10% if the company is a non-filer; and

(iii) in any other case, 7.5% of the gross amount payable, if the person is a filer and 10% if the person is a non-filer.

(1)      The rate of tax to be deducted under section 156 on a prize on prize bond or cross-word puzzle shall be [15]% of the gross amount paid [for filers and 20% of the gross amount paid for non-filers].

(2) The rate of tax to be deducted under section 156 on winnings from a raffle, lottery, prize on winning a quiz, prize offered by a company for promotion of sale, shall be 20% of the gross amount paid.

        Rate of collection of tax on petroleum products under section 156A shall be [12] of the amount of payment for filers and 15% for non-filers”.

The rate of tax deducted on brokerage and commission shall be:

Rate of token tax in the case of motor vehicles:

(4)           where the motor vehicle tax is collected in lump sum,

Cash withdrawal from a bank

The Rate of tax to be deducted under section 231A shall be 0.3]% of the cash amount withdrawn for filers and “0.6” % of the cash amount withdrawn, for non filers].

 [Division VIA

Advance tax on Transactions in Bank

The rate of tax to be deducted under section 231AA shall be at the rate of 0.3% of the transaction [“for filers and 0.6% for non-filers.