6 Ways You Can Save Money By Filing Tax Returns in Pakistan

Since the percentage of Pakistanis who file income taxes is a mere 1%, the government has been taking steps which could push more people to submit their tax returns, albeit in the form of saving on withholding and advance income taxes.

These taxes are pretty high for income tax non-filers and you often end up paying huge amounts for everyday tasks, services and products. The government incentive here is that you can start filing returns and pay less withholding taxes. These can be reimbursed at the end of the year, saving you thousands of rupees each month.

So here’s a list of activities where you will save on withholding taxes if you file your tax returns. The list mentions the activity/business and the applicable tax on both, filers and non-filers:

Personal Activities

Even common tasks which do not relate to any company or organization are now charged taxes and non-filers are especially asked to pay WHT even when there’s no similar tax on filers.

Here’s the breakdown:

• On Winning a Prize Bond, Quiz Bond or Crossword Puzzle: Filer – 15%, Non-filer – 20%
• Transfer of property: Filer – 1%; Non-filer – 2%
• Advance Tax on purchase of property:
  • Immoveable property worth upto Rs. 4 million: No tax
  • Immoveable property worth over Rs. 4 million Filer – 2%; Non-filer 4%
• Tax on General Insurance Premium and Life Insurance Premium:
  • General Insurance Premium: Non-filers – 4%
  • Life Insurance Premium (Over 0.2 million annual): Non-filers 1%

Banking Transactions

Every bank transaction you perform is also taxed based on the amount you send or cash out. The tax amounts are listed below:

• On cash withdrawal (Over Rs. 50,000): Filer – 0.3%, Non-filer – 0.6%
• On Demand Draft, Payment Order, CDR, STDR, RTC or similar instrument (Over 25,000): Filer – 0.3%, Non-filer – 0.6%
• On Online money transfer or other electronic mail (Over 25,000): Filer – 0.3%, Non-filer – 0.6%
• Advance tax on sale of demand draft, pay order etc.: Filer – 0%; Non-filer 0.6%
• All bank transactions: Filer – 0%; Non-filer 0.6%

Motor Vehicles

Most activities related to motor vehicles also include withholding tax (WHT) based on a person’s status as a filer or non-filer, where the latter are taxed higher:

• Registration of a vehicle:
  • Upto 850cc: Filer – Rs. 10,000; Non-Filer – Rs. 10,000
  • 851cc to 1000cc: Filer – Rs. 20,000; Non-Filer – Rs. 25,000
  • 1001cc to 1300cc: Filer – Rs. 30,000; Non-Filer – Rs. 40,000
  • 1301cc to 1600cc: Filer – Rs. 50,000; Non-Filer – Rs. 100,000
  • 1601cc to 1800cc: Filer – Rs. 75,000; Non-Filer – Rs. 150,000
  • 1801cc to 2000cc: Filer – Rs. 100,000; Non-Filer – Rs. 200,000
  • 2001cc to 2500cc: Filer – Rs. 150,000; Non-Filer – Rs. 300,000
  • 2501cc to 3000cc: Filer – Rs. 200,000; Non-Filer – Rs. 400,000
  • Above 3000cc: Filer – Rs. 250,000; Non-Filer – Rs. 450,000
• Transfer of registration or ownership of a vehicle:
  • Upto 850cc: Filer – Rs. 0; Non-Filer – Rs. 5,000
  • 851cc to 1000cc: Filer – Rs. 5,000; Non-Filer – Rs. 15,000
  • 1001cc to 1300cc: Filer – Rs. 7,500; Non-Filer – Rs. 25,000
  • 1301cc to 1600cc: Filer – Rs. 12,500; Non-Filer – Rs. 65,000
  • 1601cc to 1800cc: Filer – Rs. 18,750; Non-Filer – Rs. 100,000
  • 1801cc to 2000cc: Filer – Rs. 25,000; Non-Filer – Rs. 135,000
  • 2001cc to 2500cc: Filer – Rs. 37,500; Non-Filer – Rs. 200,000
  • 2501cc to 3000cc: Filer – Rs. 50,000; Non-Filer – Rs. 270,000
  • Above 3000cc: Filer – Rs. 62,500; Non-Filer – Rs. 300,000
• At the time of sale of new vehicle (from manufacturer):
  • Upto 850cc: Filer – Rs. 10,000; Non-Filer – Rs. 10,000
  • 851cc to 1000cc: Filer – Rs. 20,000; Non-Filer – Rs. 25,000
  • 1001cc to 1300cc: Filer – Rs. 30,000; Non-Filer – Rs. 40,000
  • 1301cc to 1600cc: Filer – Rs. 50,000; Non-Filer – Rs. 100,000
  • 1601cc to 1800cc: Filer – Rs. 75,000; Non-Filer – Rs. 150,000
  • 1801cc to 2000cc: Filer – Rs. 100,000; Non-Filer – Rs. 200,000
  • 2001cc to 2500cc: Filer – Rs. 150,000; Non-Filer – Rs. 300,000
  • 2501cc to 3000cc: Filer – Rs. 200,000; Non-Filer – Rs. 400,000
  • Above 3000cc: Filer – Rs. 250,000; Non-Filer – Rs. 450,000
• Private motor vehicle tax:
  • Upto 1000cc: Filer – Rs. 800; Non-Filer – Rs. 1,200
  • 1001cc to 1199cc: Filer – Rs. 1,500; Non-Filer – Rs. 4,000
  • 1200cc to 1299cc: Filer – Rs. 1,750; Non-Filer – Rs. 5,000
  • 1300cc to 1499cc: Filer – Rs. 2,500; Non-Filer – Rs. 7,500
  • 1500cc to 1599cc: Filer – Rs. 3,750; Non-Filer – Rs. 12,000
  • 1600cc to 1999cc: Filer – Rs. 4,500; Non-Filer – Rs. 15,000
  • 2000cc & above: Filer – Rs. 10,000; Non-Filer – Rs. 30,000
• Annual tax for transport service providers:
  • Goods transport capacity: Filer Rs. 2.5/kg; Non-filer: Rs. 4/kg
  • Vehicle with laden weight capcity of over 8,120kg: Rs. 1,200
• Passenger transport service providers:
  • Capacity between 4 to 9 passengers: Filer – Rs. 50 per seat, Non-filer Rs. 100 per seat
  • Capacity between 10 to 19 passengers: Filer – Rs. 100 per seat, Non-filer Rs. 200 per seat
  • Capacity of 20 passengers or more: Filer – Rs. 300 per seat, Non-filer Rs. 500 per seat

Profits

• Income on dividend/payment of dividend: Filer – 12.5%, Non-filer – 20%
• Income on Sukuk: Filer – 10% to 15%, Non-filer – 17.5%
• Profit on National Savings Scheme or Post Office Savings: Filer – 10%, Non-filer – 17.5% (Over Rs. 5 lacs)
• Profit on debt paid by banking company: Filer – 10%, Non-filer – 17.5% (Over Rs. 5 lacs)
• Profit on bonds , certificates, debentures, securities: Filer – 10%, Non-filer – 17.5% (Over Rs. 5 lacs)
• On extraction of minerals from mines: Filer – 0%; Non-filer – 5%
• On brokerage or commission:
  • Advertising agents: Filer – 10%, Non-filer 15%
  • Life Insurance Agents (Commission under Rs. 5 lacs): Filer – 8%, Non-filer 16%
  • People not covered in the above two points: Filer – 12%, Non-filer 15%

Payments to Non-Residents

When any Pakistani makes a payment to non-residents or non-resident’s company through a contract, the following difference in taxes applies to filer and non-filers:

• On construction related contracts: Filer – 7%, Non-filer – 12%
• On other services and TV advertisements: : Filer – 7%, Non-filer – 12%
• Sale of goods (Company): : Filer – 4%, Non-filer – 6%
• Sale of goods (Other than company): Filer – 4.5%, Non-filer – 6.5%
• On Providing Services (Company): Filer – 8%, Non-filer – 12%
• On Providing Services (Other than company): Filer – 10%, Non-filer – 15%
• Execution of any other contract: Filer – 7%, Non-filer – 12%

Local Payments

When any business person makes a payment to local residents or companies, the following difference in taxes applies to filer and non-filers:

• On supply by distributors: Filer – 3%, Non-filer 3.5%
• On sale of other goods (Company): Filer – 4%, Non-filer – 6%
• On sale of other goods (Other than company): Filer – 4.5%, Non-filer – 6.5%
• Payments to Electronic or Print Media for ads: Filer – 1.5%, Non-filer – 12 to 15%
• On transport services (Company): Filer – 8%, Non-filer – 12%
• On transport services (Other than company): Filer – 10%, Non-filer – 15%
• Execution of any other contract (Company): Filer – 7%, Non-filer – 10%
• Execution of any other contract ( Other than company): Filer – 7.5%, Non-filer – 10.5%
• On selling petroleum products to a petrol pump: Filer – 12%, Non-filer – 15%