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Pakistan’s tax base shrinks, only 40% NTN holders file returns

The government’s tax distribution campaign has collapsed as only 2.5 million people have filed annual income returns against the 6.2 million National Taxpayers’ Compensation which shows the weak author of the tax machine.

The returns are 278,581 or 11% less than in the last tax year even though Prime Minister Imran Khan’s government is offering a tax exemption and a conducive forum to traders in the hope that it will bring them in hope.

More than one-tenth of the time required a state tax, led by Imran Khan, known for his financial integrity.

The tax center is headed under the chairmanship of the Federal Board of Revenue (FBR) Shabbar More, who has been brought in by the private sector to promote reform. Government has not been able to announce a substitute for the pass though it has held numerous meetings in the twin cities.

Also noteworthy is the fact that despite winning major tax treaties from the government, the number of merchant revenue returns dropped this year compared to last year, according to FBR figures.

Compared to the 415,624 returns filed by sellers in the tax year 2018, this year alone 399,534 sellers filed forms, according to the FBR. About 16,100 merchants escaped the FBR net this year.

The 2.5 million files – to be exact – were 40% of individuals and entities registered with the FBR for income tax purposes, indicating extremely poor performance. About 6.2 million people are registered on the FBR and hold NTN.

Completing income tax returns is a legal obligation of all people, earning more than Rs400,000 tax a year, owning at least 1,000cc or owning a home.

The FBR has published a new Active Taxpayers List (ATL) in the tax year 2019 and 2.53 million people have filed tax returns, said FBR Inland Revenue Policy Member, Dr Hamid Atiq Sarwar, who is also the official spokesman.

In the 2018 tax year, more than 2.8 million people had filed forms, Sarwar said.

Instead of showing an increase in tax revenue, the tax base actually crashed by 279,000 or 11% in the 2019 tax year. On the question of traders fleeing the tax net instead of entering, Sarwar said that increasing the number of traders from 400,000 to three million would be a gradual process. He said committees had been set up to resolve the issues regarding the filing of refunds.

In October last year, retailers received high government approval for the intervention of former PTI secretary-general Jahangir Khan Tareen. The government has extended the tax exemption limit for retailers and allowed only those paying up to Rs1,2 million a year in electricity bills and owning 1,000,000 square feet of stores to be registered.

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