The government has introduced significant changes to its income tax system through the Finance Act 2024. These measures aim to encourage timely tax filing, increase revenue collection, and potentially shift investment patterns.
New Late Filer Category in Pakistan:
Previously, taxpayers were classified as either “Filers” or “Non-Filers.” The new Late Filer” category introduces a penalty for individuals and associations of persons (AOPs) who fail to submit their tax returns by the deadline (typically September 30th). Late filers will face higher tax rates compared to regular filers.
After implementation of Finance Act 2024 FBR added the Late FilerCategory. Any taxpayer filing tax return after its due date will now be marked as Late Filer. Late Filer will have same tax rate as of Filer for now except for property buying/selling transactions. The concept of immediate Active Tax Filer is no more.
Initially rates are increased on Property Purchase and Sale for Late Filers but may be implemented on other incomes in future as well.
Late Filer Status Challenged in Lahore High Court:
The Late Filer status and its taxation thereof has been challenged in Lahore High Court. Stating that the petitioner is an active taxpayer but is being compelled to pay advance tax at an enhanced rate of 6% instead of the prescribed rate of 3% under Section 236K of the Income Tax Ordinance, 2001. The petitioner argues that the impugned actions of the respondents are contrary to the applicable law and unsustainable.
The Lahore High Court’s decision on this case is eagerly awaited by numerous taxpayers who have been subjected to heightened tax rates with retroactive effect. As tax returns for the year 2023 cannot be amended, the court’s ruling will determine whether these taxpayers can seek relief from the increased tax burden.
Who are Filers and Non-Filers in Pakistan?
- Filers: Individuals or AOPs who register with the Federal Board of Revenue (FBR) and submit their annual income tax returns within due dates.
- Non-Filers: Individuals or AOPs who haven’t registered with the FBR or haven’t filed their tax returns.
How to Become a Filer in Pakistan:
Benefits of being a Filer include potentially lower tax rates, easier access to loans and financial services, and avoidance of the “Late Filer” penalty. Here’s how to become a filer:
- Register online on the FBR website.
- File your income tax return annually by the deadline.
Withholding Tax Slabs for Property Transactions:
The new budget introduces tiered withholding tax rates for property transactions based on the property value and filer status. This means Active filers will pay a lower withholding tax compared to late filers or Non Filers.
Impact on Investment:
The flat 15% tax rate on capital gains from property sales (regardless of holding period) for acquisitions after July 1, 2024, might discourage investment in real estate. This could potentially shift surplus funds towards bank schemes or the stock market, which could benefit other sectors of the economy.
Overall, the Finance Act 2024 aims to:
- Encourage timely filing of tax returns by penalizing late filers.
- Increase tax revenue through stricter enforcement and revised tax rates.
- Potentially influence investment patterns by making real estate less attractive compared to other options.
I have filed my tax return on 23 September 2024. Even received an email, but still it’s showing my status as Active (Late Filer), how so? Even today it’s 27 September 2024, so how come my status is still late Filer? Also can late Filer leave the country?
Your status will be activate if you have filed 2023 tax-returns and paid ATL Surcharge of 2023.
Hi. I have filed tax return for 2023 and have also paid surchage still my ATL status is active -late filer.
Also i have filed this year’s return on time i.e. before 3oth sept 2024
If I file tax return 2023, and pay Atl surcharges for the year 2023 after Due date which is I think 15 oct, So am I considered Active or Late filler ?
I have filed my tax on due date and my status is showing late filer what is this? Also I have paid 2023 tax file surcharge.
Okara — In a dramatic turn of events, Mr. Amanat Rao, a proud and responsible taxpayer from the heart of Okara, has taken the phrase “tax burden” to a whole new level. Known for his impeccable tax record, Mr. Rao not only paid his dues on income but also on his herd of buffaloes and dairy operations located in the serene outskirts of Ludhiana, Okara. His commitment to the system was unmatched — until the government’s latest tax amendment turned his life upside down.
Amanat, an honest man by nature, has been struggling with sleepless nights ever since the notorious late-filer amendment came into play, a policy that’s wreaking havoc on the wallets of conscientious citizens like him. With relentless pressure mounting from every corner, this once peace-loving dairy farmer reached his breaking point. And in an unprecedented move, Mr. Rao — accompanied by his beloved buffaloes — migrated to his ancestral home in Haryana, India, in a bid to escape the bureaucratic turmoil.
“I paid taxes on my buffaloes! On their milk! Even on the dairy itself!” exclaimed Amanat before releasing his herd into the wild, allowing them to roam free like economic refugees fleeing a tax apocalypse. The once bustling dairy farm now stands abandoned, the scent of milk and honest work replaced by the stale stench of broken promises.
As Mr. Rao crosses the border, taking refuge in the lands of Haryana, a piece of Okara’s pride migrates with him — his sense of duty crushed under the weight of governmental red tape.
This incident serves as a stark reminder of the rising frustrations among Pakistan’s taxpayers, who now find themselves shackled by policies that have turned diligent citizens into wandering nomads, seeking solace from their own government. Amanat Rao’s story has become the talk of the town — a tale of one man’s stand against the suffocating grasp of unnecessary amendments. While Okara bids farewell to its taxpaying champion, Haryana welcomes a man whose only crime was caring too much.