How To Become a Tax Filer In Pakistan?

This is essential for all Persons to file an income tax return in Pakistan that comes under the category defined by Income Tax Ordinance, 2001. Understanding about the filing of Income Tax returns is most important for every Taxpayer either he should e file or manually submit his income Tax Return in Pakistan. There are penalties for not Filing of Income Tax Return in Pakistan which is due when a Taxpayer didn’t file his Income Tax Return instead of having knowledge.

Govt of Pakistan categorizes the Taxpayers into filer and non-filer status which means the Taxpayer who files his Income Tax Return along with all requisites required by FBR become a Tax filer in Pakistan and Taxpayer who did not file his Income Tax Return, become a non-Filer automatically. Being a Tax Filer in Pakistan, there are so many advantages which a Taxpayers avail in day to day transactions like buying and selling property, cash withdrawal from Bank, Bank Profits, and Dividends, etc.

There are two methods for filing Income Tax Return which leads to become Tax filer in Pakistan.

Manual Filing of Income Tax Return

1. Download the Income Tax Form from FBR Website.
2. Fill out Personal Particulars, Source of Income, Business/ Personal Expenses, Taxes and deductions, etc for Income Tax Return and Assets, Liabilities with reconciliation for Wealth Statement during the relevant Tax Year.
3. After completing those forms sign and submit in the relevant Department. Remember to keep acknowledgment of the same.

Online Filing/ E-File of Income Tax Return

For Filing Income Tax Return, Taxpayers have valid NTN. Taxpayer registers his details with FBR to create a login on IRIS. After registration with FBR, Taxpayer has access to the system for filing his Income Tax Return in FBR. The taxpayer made his login in FBR System and completes all the information required by FBR and submit his Income Tax Return and Wealth Statement.

Documents Checklist for Filing Tax Return and to Become a Filer in Pakistan

Following is the Tax checklist to collect the documents and forms for filing Income Tax Return and to become filer in Pakistan.

Personal Information

FBR IRIS Login is mandatory items on your tax prep checklist. All taxpayers will need the following information.

1. Your Login USER ID
2. Password

Sources of Income

All the Forms and Documents which are required for filing Income Tax Return and to become a filer in Pakistan depends on the Source of income of a Person.

List of Documents required for Salary Individual/ Employed to become filer in Pakistan

• 1. Tax Deduction Certificate of Financial Year * (July to June)
  2. Record of tax payments made in shape of cash Withdrawal, Banking instruments, Children School Fee, Mobile and Telephones, Motor Vehicle Registration and Token, Purchase and Sale of Property etc
  3. Any Additional Source of Income (Rent, Bank Profits, Dividend, Prize Bonds, Foreign Income, Capital Gain, Gift, Inheritance if any

List of Documents required for Business Individual and Self-Employed to become Filer in Pakistan

• 1. Income records to verify amounts (Business Bank Statements and Accounts etc)
  2. Records of all expenses — cheque registers, credit card statements, Salary Expenses, Rent Expenses, Utilities Expenses, Traveling, Communication Expenses etc
  3. Business-use asset information (cost, date placed in service, etc.) for depreciation
  4. Office in home information, if applicable
  5. Record of tax payments made in shape of cash Withdrawal, Banking instruments, Electricity, Children School Fee, Mobile and Telephones, Motor Vehicle Registration and Token, Purchase and Sale of Property etc
  6. Any Additional Source of Income (Rent, Bank Profits, Dividend, Prize Bonds, Foreign Income, Capital Gain, Gift, Inheritance if any

List of Documents required in case of Rental Income to become Filer in Pakistan

• 1. Records of income and expenses
  2. Rental asset information (cost, date placed in service, etc.) for depreciation
  3. Record of Tax Payments made during the Financial Year July to June
  4. Any Additional Source of Income (Bank Profits, Dividend, Prize Bonds, Foreign Income, Capital Gain, Pension, Gift, Inheritance if any

List of Documents in case of Retirement Income to become filer in Pakistan

• 1. Pension/annuity income/Retirement Benefits
  2. Social security income (if any)
  3. Record of Tax Payments made during the Financial Year
  4. Any Additional Source of Income (Rent, Bank Profits, Dividend, Prize Bonds, Foreign Income, Capital Gain, Gift, Inheritance if any

List of Documents required in case of Savings & Investments or Dividends to become filer in Pakistan

• • Interest, dividend income
  • Income from stocks or other property
  • Dates of acquisition, records of your cost of purchase or other basis in property you sold
  • Expenses related to your investments
  • Record of tax payments made in shape of cash Withdrawal, Banking instruments, Children School Fee, Mobile and Telephone, Motor Vehicle Registration and Token, Purchase and Sale of Property, Capital Gain on Securities, Gift, Inheritance etc

Other Income & Losses

• • • Prizes and awards
    • Trusts
    • Royalty Income
    • Gift
    • Inheritance
    • Foreign Remittances
    • Any other Income received

Personal Expenses Financial Year (July to June)

1. Rent
2. Rates / Taxes / Charge / Cess
3. Vehicle Running / Maintenance
4. Travelling
5. Electricity
6. Water
7. Gas
8. Telephone
9. Asset Insurance / Security
10. Medical
11. Educational
12. Club
13. Functions / Gatherings
14. Donation, Zakat, Annuity, Profit on Debt, Life Insurance Premium, etc.
15. Other Personal / Household Expenses
16. Contribution in Expenses by Family Members

Wealth Statement

Personal Assets and Liabilities

1. Agricultural Property
2. Commercial, Industrial, Residential Property (Non-Business)
3. Business Capital
4. Equipment (Non-Business)
5. Animal (Non-Business)
6. Investment (Non-Business) (Account / Annuity / Bond / Certificate / Debenture / Deposit / Fund / Instrument / Policy / Share / Stock / Unit, etc.)
7. Debt (Non-Business) (Advance / Debt / Deposit / Prepayment / Receivable / Security)
8. Motor Vehicle (Non-Business)
9. Precious Possession
10. Household Effect
11. Personal Item
12. Cash (Non-Business)
13. Any Other Asset Gold Jewelry, Prize Bonds etc
14. Assets in Others’ Name Spouse, Children, Parents, Brother
15. Assets held outside Pakistan

Liabilities

Credit (Non-Business) (Advance / Borrowing / Credit / Deposit / Loan / Mortgage / Overdraft / Payable)

Active Taxpayer List in Pakistan

When the Income Tax Return is submitted along with Wealth Statement, Taxpayer automatically becomes Filer, when the FBR system updates its records on Every Sunday night. Active Taxpayer status checked by visiting FBR Website or sending massage on 9966 by writing ATL Space CNIC for example Type (ATL 35202 XXXXXXX1) in massage and send message on 9966.

Benefits of Becoming a Tax Filer in Pakistan

Income Tax Return is mandatory to file. Individuals, Firms and Companies filing their Income Tax Returns having Active Taxpayer status are getting all benefits from different sectors in Pakistan.

The followings are some of the benefits to become a Filer in Pakistan, which shows a clear picture of how an Individual, Firm, and Company are benefited after becoming Tax Filer in Pakistan.

• Less Taxes in Buying/Selling/Transfer of Immovable Property.
• Less Taxes on Registration/Transfer/Token of Motor Vehicles.
• Less Taxes on WHT on Cash Withdrawal from Banks.
• No Taxes on Issuance of Banking Instruments [Cheques, Pay order, Demand Drafts, etc] and Money Transfer.
• Less Taxes on Bank Profits / Saving Certificates / Dividends / Commission / Prize Bonds winning etc.
• Less Taxes on providing professional Services.
• Preference for eligibility in all loan applications from Banks
• Eligibility for obtaining government tenders, registration on corporate panels:
• Easy Income Assessment of Individual while processing Visa Applications
• Avoidance from Audit and Penalty of Rs. 40,000/- for non-filing of Income Tax Return

Tax Filer in Pakistan Claim Refund/adjustment of followings while Filing Income Tax Return

• Cash Withdrawal from Bank under section 231
• Advance Tax on sale or transfer of immovable property under section 236 C.
• Advance Tax on function and gatherings under section 236D.
• Collection of Advance Tax by Educational Institutions under section 236 I
• Advance Tax on purchase of Immoveable Property under section 236K
• Income Tax/ Withholding Tax on Purchase, Registration, Transfer and Token of Motor Vehicles under section 234
• Advance Tax on Domestic Electricity Consumption under section 235A
• Advance Tax on International Air Ticket under section 236L
• Advance Tax on Banking Transaction other than cash under section 236P
• Withholding Tax paid on Mobile Phone Bills under section 236(1)(a)
• Withholding Tax on Telephone Landline Bills under section 236
• Advance Tax on Purchase of Air Ticket under section 236B

 

Note: If the Taxpayer is filing his/her Income Tax Return and Wealth Statement first time that will not become a filer until the last date of filing is finished. In case the Taxpayer needs immediate status of Active Taxpayer or Filer in Pakistan then he has to submit Income Tax Return and Wealth Statement for preceding Year as well along with the surcharge of Rs. 1000/.

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