As an active taxpayer in Pakistan, maintaining a healthy Active Taxpayer List (ATL) status is crucial. But what triggers an ATL status to become inactive in March? This article explores the three main reasons and provides resources to stay compliant.

Why Did Your ATL Status Become Inactive?

The Federal Board of Revenue (FBR) reviews taxpayer information in March and may deactivate your ATL status for the following reasons:

1. Late Tax Return: Failing to file your income tax return by the due date (October 31st for the previous tax year) can lead to deactivation.
2. Non-Filing of Tax Return: Completely neglecting to file your income tax return, regardless of the due date, will likely result in deactivation.
3. Unpaid Late Filing Challan: If you filed your return late but didn’t pay the associated late filing penalty (challan), known as ATL Surcharge by the deadline, your ATL status might be deactivated.

Example: If you haven’t filed your tax return for the tax year 2023 (income earned between July 1st, 2022 and June 30th, 2023), and the due date has passed (October 31st, 2023), your ATL status might be deactivated on March 2024.

How to activate ATL status?

Here’s how to ensure your ATL status remains active:

• File Your Tax Return on Time: Make filing your income tax return a priority by the designated due date.
• Pay Any Late Filing Penalty: If you miss the filing deadline, file the return as soon as possible and pay the associated late filing challan to avoid deactivation.
• Monitor Your ATL Status: Regularly check your ATL status on the FBR’s website using your National Tax Number (NTN). This allows you to identify any potential issues and take corrective action promptly.

New Late Filer Category:

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. For now separate tax rates for late filers are only introduced for Buying/Selling of property. However to ensure tax culture these rates might be extended to other income streams as well.

The concept of immediate Active Tax Filer is no more. Even the newly registered persons who filed past year tax returns (2023 and previous) or only current year tax return (2024) will be marked as Late Filers.

Consequences of an Inactive ATL Status:

An inactive ATL status can lead to various inconveniences:

• Limited Business Transactions: Certain businesses may be reluctant to transact with you if your ATL status is inactive.
• Difficulty Obtaining Loans: Financial institutions might hesitate to approve loans for individuals with inactive ATL status.
• Delays in Government Services: Processing of government services, such as passport renewals, may be delayed due to an inactive ATL status.

Frequently Asked Questions:

• How to Pay 2023 ATL Surcharge for Inclusion in ATL
• Consequences of Not Filing Tax Returns in Pakistan

Conclusion:

By understanding the reasons for ATL deactivation and taking proactive steps to stay compliant, you can ensure a smooth and hassle-free experience as an active taxpayer in Pakistan. Remember, timely filing, challan payments, and regular monitoring of your ATL status are key to maintaining an active and healthy tax profile.