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).
Things You Need to Know Beforehand
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.
For Individuals, Get Registered Online with FBR’s E-Enrollment System
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:
- You’ll have to get your Registration Number and password first via FBR’s e-Enrollment process. To do that, click here to get to the main page of Iris, FBR’s simplified ERP system for tax payer registration.
- You’ll need to go to ‘Registration for Unregistered Person’ if you’re a first time user. Provide the information required.You’ll be sent a confirmation input to validate your account (usually an email and/or SMS). You’ll be sent password/PIN to login with your account. Sometimes this process might take a few days for security reasons.
- Once you’re registered successfully and have logged in by entering your Registration No. and password on the main page of Iris, you can now file your wealth statement.
- For salaried persons, you will have to fill wealth statement and income tax returns. The procedure for filling out your details for wealth statement income tax returns are present here.
- More detailed help can be found here, concerning FAQs, Registration, Income Tax Returns and more.
Video Tutorial for Preparing Your Wealth Statement
Video Tutorial for Preparing Your Income Tax Statement
Things to note:
The UserID for Iris is your Registration Number as follows:
- In case of individual Pakistani – the 13-digits on CNIC/NICOP (without dashes)
- In case of individual Non-Pakistani – the 7-digits NTN (excluding dash and check digit)
- In case of AOPs/Companies – the 7-digits NTN (excluding dash and check digit).
For Companies and AOPs, NTN Registration is Required
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)
- Visit the link e.fbr.gov.pk and select the tab E-registration.
- Mention your CNIC Number, name and load image
- Give your date of birth as per CNIC, your residential address, your activity, land line, mobile number and email address
- Since you are filling in the form yourself select the ‘Authorized Representative u/s 172 and then select ‘Self’
- Click on ‘Save Registry’
- Then in the next column, mention your employers NTN and city of your employment if you are an employee. If a businessman, fill in the details of your business as well.
- Your application is complete. Click on ‘Print’ to get a print of the application and sign it.
- It will alert you if there is an existing NTN from your previous job. If you still have doubts, use your CNIC number to get it.
- You will be allotted an NTN after 2 working days via an email.
- Meanwhile, enclose a paid electricity bill, salary certificate and copy of CNIC with the printed application and take it to your concerned RTO office. You will be issued the NTN certificate.
The Last Word
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.