Pakistan has one of the lowest tax-to-GDP ratios in the world. For the uninitiated, tax-to-GDP ratios are used to assess a country’s development year after year. They say the higher the Gross Domestic Product (GDP) of the country, the higher the amount of tax revenues a government can earn for the same since the value of goods and services it exports have increased.
With those boring numbers and information out of the way, here’s why people who are employed/salaried should care about filing their income tax returns now more than ever. You must have heard about the bank transactions being taxed more for non-filers.
As it turns out, even real-time interbank transfers are charged a new withholding tax (WHT) under section 236P of the Income Tax Ordinance 2001 for non-filers. All banking transactions will be taxed at 0.3 percent WHT unless they file their income tax returns by Nov 30th 2016. You also get charged more when buying cars or other property. And if your WHT amount is greater than your applicable taxes, filing is the only method which can help you get a refund, generally in thousands or rupees for the average person.
Moreover, if you file tax returns then chances are you could get better than usual services at airports, excise offices and various other benefits that are not available to non-filers.
And this is where this simplified guide comes in. It will explain how to file tax returns online hassle-free. No longer will you need to hire the services of a lawyer or tax consultant to do it for you.
And since the process of registration is all online, you really don’t have the ‘aint nobody got time for that’ excuse to play (unless you don’t happen to have a CNIC yet, in which case you need to visit the NADRA office near you).
If you’re earning 400,000/- PKR or above in a year, then yes, the income tax applies to you. Filing tax returns online can make this a lot convenient. The government determines how much the tax rate applies to your earnings year by year, with the annual Budget determining these rates in June of every year.
Before filing tax returns online via FBR’s portal, you will need to calculate your tax rates for the year 2015 accordingly based under which income slab you fall in.
As of November last year, FBR issued an SRO that stated that a filer can use their CNIC number as NTN without the need to go through additional hassles related to registering the NTN (National Tax Number). This development has taken the sting out of registering as a tax payer in Pakistan. Here’s how you can register as one:
Things to note:
The UserID for Iris is your Registration Number as follows:
If you are a company/AOP, you can register for NTN (National Tax Number) online. (It’s preferable to use Internet Explorer to do this; there will be problems with Chrome and Mozilla Fox)
Hopefully, this guide helps you in filing tax returns online with minimal confusion. As we discussed earlier, the whole idea behind filing your tax returns is so that the government doesn’t apply WHT on your banking transactions with you none the wiser.
When you’re filing a return, you can claim WHT from FBR. After carrying out an audit and evaluating your returns, FBR will send a cheque in case it finds that you qualify for refunds.
If the idea is to enhance and broaden the tax base here, reforms in the taxation sector are necessary. There’s still room for improvement to simplify the tax filing process for citizens and firms alike.
It’s a fair assumption to make that there are many Pakistanis who want to contribute to the well being of the nation and pay their taxes duly, if only it wasn’t so complicated to file your tax returns in the first place.
The government for their part needs to reform the tax machinery in order to facilitate law-abiding citizens of this country. We hope FBR continues to streamline the process of how to file tax returns easily in the near future.