ByIslamabad, Pakistan: The Federal Board of Revenue (FBR) is facing a significant challenge with the increasing number of “junk” tax returns, which account for 68% of all income tax returns filed in 2023.
These nil-filers, who submit returns without declaring any taxable income, pose a significant challenge for the FBR in identifying individuals who are not paying their fair share of taxes.
The FBR has decided to send e-notices to 1.6 million nil-filers, urging them to submit their actual returns for the tax year 2024. These individuals have been identified based on their financial transactions, indicating that they likely have taxable income. Dawn
The FBR is also considering measures to restrict the activities of non-filers, including prohibiting them from engaging in financial or investment activities and imposing travel restrictions.
There are three main categories of non-filers:
- Nil filers: Individuals who submit returns without declaring any taxable income.
- Null filers: Individuals with no business transactions on their sales tax returns.
- Below-threshold (BTL) filers: Individuals who claim their income is below the taxable threshold.
The FBR has identified a significant tax gap among the wealthiest 1% of Pakistanis, who are estimated to have underpaid taxes by Rs1.3 trillion in 2023.
To address the issue of junk returns, the FBR is considering introducing mandatory digital invoicing and conducting data triangulation to identify individuals who are evading taxes.
Experts believe that implementing existing tax policies effectively and improving data integration are crucial for enhancing tax collection and reducing the prevalence of junk returns.
