Is It Really Necessary for People in Pakistan to File Their Tax Returns?

According to Pakistan's income tax law, any citizen who earns an annual income of Rs 300,000 or more (or Rs 25,000 per month) is required to submit an income tax return to Pakistan's Federal Board of Revenue (FBR) on an annual basis. This law applies to citizens of all professions and businesses in Pakistan. The FBR had recently made electronic filing of tax returns a requirement for salaried personnel with an annual income of at least Rs 500,000.

In accordance with the income tax ordinance, submitting a tax return and actually paying the tax are two separate and independent actions. If a person's annual income is at least PKR 300,000 or more, then that person is required to file a return regardless of whether or not they pay tax or have their salary tax withheld at the source. It is essential to be aware that the amount of taxable income is PKR 400,000, but the amount that must be reported on an income tax return is PKR 300,000.

The filing of the income return involves more than just the payment of taxes; it also includes a statement of wealth and a breakdown of the sources of revenue. Because individuals are required to report and provide an explanation for any shift in the sources of their income as well as any increase or decrease in their wealth when they file their annual tax returns, very few individuals choose to conceal particular facts. The majority of people do not file their returns in order to conceal new sources of income or increases in their assets.

According to the opinions of various specialists, this presents a significant obstacle for the documentation of the economy. When a person's declared expenditures were compared to his filed tax returns, a recent investigation found that billions of rupees in tax evasion had been committed by the individual.

It is a crime to violate the Income Tax Ordinance 2001 (ITO), which states that failing to file a return for one's income is a violation. Report of Income Taxes Although filing tax returns is an essential component of any economic system, this is not the same as actually paying tax obligations. He contends that even if a person pays their taxes but does not file their returns, that individual is still in violation of their legal obligations.

The responsibility for filing income tax returns is broken down into a lot of specifics in the Internal Revenue Code of 2001, specifically in Sections 114 and 115. Important components of these can be broken down as follows:

The following individuals are required to submit an income tax return in accordance with the provisions of the Income Tax Ordinance 2001:

Every single company, every single self-employed person whose annual income is more than PKR 300,000, and every single salaried person whose annual income is more than PKR 300,000 are all required to file a tax return.

A non-corporate individual whose taxable income for the year is greater than the maximum amount that can be exempted from taxation under the provisions of this ordinance for the given year is considered to be a high-income taxpayer.

Any organisation that supports charitable causes

Any kind of social service organisation

The person has acquired a Social Security Number or a Taxpayer Identification Number (NTN)

A person who has taxable income in either of the two tax years prior to the current one; A taxpayer who has a yearly income that is in excess of PKR 300,000

Each and every person who possesses a connection to a commercial or industrial electricity source.

Every single person who possesses a motor vehicle has an engine that has a capacity that is greater than one thousand cubic centimeters.

A person who is a part of a trade and business association, a market committee, a professional body, council, or institute, or a member of a Accotech.

Whoever owns a piece of property that cannot be moved.

I has an area that is at least 250 square yards or more and owns a flat within the municipal limits ii) Area that is at least 500 square yards or more and owns a flat that is at least 2000 square feet in a rating area