ISLAMABAD - Pakistan’s tax base is likely to further broaden in the current year as Federal Board of Revenue (FBR) hopes that number of new income tax returns would surpass the number of tax filers of 2.5 million of previous year.
An official of the FBR informed that government’s campaign of broadening tax is working as number of tax filers are increasing. “The government had already given several deadlines for filing income returns in order to give opportunities to people to become filers,” he said.
He further said that government would decide whether to further extend the deadline of filing tax returns, which is expiring on Sunday (December 15).
The FBR, he said, had so far received more than 1.7 million income tax returns (till December 6) for Tax Year 2019 as compared to 1.2 million returns during the same period of the Tax Tear 2018, reflecting an increase of 0.5 million returns. The number would further increase when the fresh data would compile.
The number of tax filers increased by 0.6 million during Tax Year 2018 as number of return filers went up from 1.9 million (Tax Year 2017) to 2.5 million (Tax Year 2018). The amount received along with increased number of filers stood at Rs5 billion.
The FBR is expecting to generate more revenue from the new filers, which would help the government in narrowing its tax collection shortfall.
The FBR had faced Rs200 billion shortfall in tax collection during the five months (July to November) of the current fiscal year. However, the government had attributed the massive shortfall in tax collection to over $4 billion import compression, as the tax collected on imports constitutes to 50 percent of tax collection. Total tax collection during the first five months of the current fiscal year (up to November 30) was recorded at Rs 1,618 billion against the indicative target of Rs 5.5 trillion for the entire fiscal year. The government is working to downward revise the target by Rs300 billion after convincing the International Monetary Fund (IMF).
FBR should restrict retailers to purchase only from registered manufacturers: FEBR
INP adds from Lahore: The Friends of Economic and Business Reforms (FEBR), has once again appealed the FBR to restrict the retailers to make their purchases only from sales tax registered persons for their income tax returns instead of binding the manufacturers for their sale only to registered suppliers and retailers. The condition of CNIC demanding from retailers is adding tensions for registered manufacturers leading to huge drop in their sale, grinding business activities to a halt.
FEBR President Kashif Anwar, in a letter to FBR Chairman Shabbar Zaidi, has reiterated his demand that the supplies shown by sales tax registered entities in their sales tax returns should be automatically shown as purchases are shown in the annual business income tax returns of those who are only registered in Income Tax. This will complete the supply chain from sales tax registered suppliers to the Income Tax registered purchasers, he added.
“With regard to purchases made by all retailers, suppliers, agents and others not registered in sales tax, we request that they may be enjoined to make purchases from sales tax registered persons for their businesses income tax returns. As in case of sales tax registered persons, all purchases are automatically shown in Annex-A (Domestic Purchase Invoices) & Annex-B (Imports) to avail the benefits of input sales tax, similarly the purchases made by retailers, individuals and others not registered in sales tax must be automatically shown in their annual income tax returns against their NTN’s.”
The law has made it mandatory for every sales tax registered person either manufacturer, importer, dealer, distributor, wholesaler or retailer to mention sales tax registration number, national tax number or CNIC on sales tax invoice above Rs 50,000 value to feed Annex-C (Domestic Sales Invoices) of sales tax return which automatically verifies the particulars of buyers and compiles their record internally. If one does not provide NTN or CNIC, the proportionate input sales tax will be disallowed to registered person, he said.
On the other hand, all the purchases of sales tax registered persons either local or imported are updated automatically to avail the benefit of input tax in their sales tax return and no purchase entry can be manual.
He said the FEBR is not against documentation rather it propagates for the benefits of becoming filer. But, in order to avail full sales tax input against purchases in sales tax return, the condition of CNIC is creating problems for sales tax registered suppliers, and it goes without saying that all the legal formalities are for those who are in the tax net and who are more documented, he added.