FBR Targets 8.3 Million Non-Filers with Upcoming Action Plan

The Federal Board of Revenue (FBR) has recently disclosed that approximately 8.3 million people who are registered in their tax system have not filed their tax returns, despite being listed on the Active Taxpayer List (ATL). This announcement highlights a major gap between the number of taxpayers registered and those actively complying with tax filing requirements. Let’s delve into the details of this development, its implications, and FBR’s plans to address this issue.

The Scale of Non-Filing

FBR’s data reveals that approximately 13.45 million individuals are registered taxpayers with active NTN (National Tax Number) accounts. However, only 5.1 million (51 lakh) of these individuals have filed their tax returns and are listed on the ATL. This leaves a significant 8.3 million (83 lakh) individuals who are registered but have not filed their returns.

The ATL is a publicly accessible list available on the FBR website. It allows users to view details of active taxpayers who have fulfilled their tax obligations. The list also exposes discrepancies, such as those who have registered for tax purposes but have failed to file their returns.

Understanding the Issue

A large portion of these 8.3 million individuals may not even be aware of their registration in the tax system. Many were likely registered automatically during financial transactions, such as property purchases, where non-filers pay higher tax rates. In such cases, intermediaries often register buyers as taxpayers using their CNIC, potentially without their knowledge, to benefit from lower tax rates. This has led to individuals being unknowingly added to the tax system.

FBR’s Data Collection Efforts

FBR has been proactive in collecting data from various sources to identify non-filers. These sources include:

• NADRA (National Database and Registration Authority)
• Excise and Taxation Department
• Property Registration Departments
• Banks
• Foreign Travel Records

This data is being analyzed to identify individuals whose financial transactions or lifestyles indicate taxable incomes but who have not filed their returns.

Planned Actions by FBR

FBR has announced that it will issue notices to non-filers, starting with the top 190,000 individuals identified based on income and transaction data. The notices are expected to be issued by February 2025. These notices will require recipients to file their tax returns and may include penalties for non-compliance.

To handle this massive undertaking, FBR is reportedly hiring additional staff and auditors to analyze data and target non-compliant taxpayers. Notices will be issued based on a targeted approach, ensuring that individuals with significant discrepancies are prioritized.

Importance of Compliance

Taxpayers are advised to check their registration status on the FBR website to ensure they are not unknowingly listed as registered taxpayers. Individuals who discover they are registered should take the following steps:

1. Verify Registration: Check whether you have an NTN or are listed on the ATL.
2. File Returns: If registered, file your tax returns promptly to avoid penalties.
3. Update Contact Information: Ensure that the correct email address and mobile number are linked to your tax profile to receive timely notifications.

Broader Implications

FBR’s focus on increasing the number of active taxpayers aligns with its broader goal of enhancing tax compliance and boosting revenue collection. A higher number of compliant taxpayers also strengthens the case for reducing tax rates in the future, although such reductions have been rare historically.

Final Thoughts

This development underscores the importance of maintaining awareness of your tax status. By proactively checking your records and filing returns, you can avoid penalties and legal consequences. FBR’s efforts are part of a larger plan to bring more individuals into the tax net and ensure compliance across the board.

For taxpayers, this is a timely reminder to remain vigilant and manage their tax responsibilities effectively. If you have any questions or require guidance, feel free to reach out for assistance.