The Federal Board of Revenue (FBR) in Pakistan recently introduced a set of changes that have streamlined the filing process for taxes, and particularly simplified and made it more equitable for those individuals who do not have a need to file their tax returns. The reforms outlined are aimed at exempting citizens from the stringent penalties and hefty taxes levied on them, including low income persons who are provided with specific exemptions.
Changes Made Significant in Filing Tax Returns
Category for Dependents regarding Family
A major new move is the “Family Category.” This category will force dependants such as housewives and children below 25 years to not file tax returns. The move will be relieving many people without taxable income, making it less stressful to families going through the process.
Raise the Threshold of Income
Another essential reform is the modification of the income threshold. Individuals whose annual income falls below Rs 600,000 need not file a tax return. The direct beneficiaries would be poor citizens, thus relieving some of the burden on the population below the threshold at which taxes are paid.
SIM Blocking and Travel Bans Abolition
The government intends to eradicate harsh penalties for those individuals who are not under the obligation to file tax returns. This entails abolishing acts like blocking SIM cards and travel bans for people in this category. It has been one major cause of suffering for most of the country’s citizens whose source of income is either too low or irregular and cannot, by law, file tax returns; relieving them of such penalties will greatly alleviate a good deal of their suffering.
Learn More: Master Income Tax Return Filing Method
Special Overseas Pakistanis Exemptions
Another significant reform dimension is the overseas Pakistanis exemption. Overseas Pakistanis will not need to file their income tax return, but simultaneously they would be able to stay in the ATL. There will be a massive relief for expatriates who are worried about the hassle of filing tax returns abroad.
Nil-Returns Conundrums Management
In recent times, “nil-returns” have skyrocketed to more than 2.5 million in the 2023 tax year. These are forms filed by those considered non-taxable due to income levels below the taxable threshold or exempted from filing. The government recognises this as an issue and seeks to give comfort to those who really have no interest in filing, thus simplifying the tax process.
Key steps towards streamlining the process
Reference Values of Asset Sales
The FBR will incorporate reference values of family in terms of asset sales like real estate, motor vehicle and huge assets, which will be designed from the declared income of the principal filer of the family. This step is towards maintaining the transparency level, and the large financial transactions must go with the income level of the taxpayers.
Limitations to Non Filers
Non-filers will face certain limitations and the first one among those are some restrictions on opening current accounts and carrying out a lot of transactions. The second thing is that non-filers will have their “as simplified Asaan accounts” to be issued for all kinds of essential banking. In return, it is expected that people will file their returns and be productive for the tax system.
Limitation on the Movement of Non Filers
Traveling might also be restricted for non-filers, especially traveling to developed countries. Exemptions are made in regard to religious journeys or visits to religious shrines, and they will not make it hard for nonfilers to undertake this pilgrimage.
Inspection of Financial Activities
The financial activities carried out in the CNICs of non-filers can be inspected by the FBR to determine undeclared income. This would prevent tax evasion and promote transparency.
Reform Package Benefits to the Taxpayer
All this would bring a fairer administration to taxation in Pakistan and make it more to the advantage of the taxpayers who do not need to return at all because it might cut down the burden of people who do not need to return. The government seeks compliance and economic growth by reducing all the unnecessary penalties, simplifying returns filing, and focusing scrutiny where it is needed.
