Filing income tax returns is an essential obligation for citizens in Pakistan. Despite its importance, many individuals tend to neglect this responsibility due to lack of knowledge or fear of the process. In this article, we will highlight the key reasons why filing income tax returns is crucial for every citizen and what consequences they may face if they fail to do so.
Why should we file income tax returns?
Filing income tax returns is not just a legal obligation, but it is also a responsibility towards your country. By doing so, you contribute to the development and progress of your nation. Taxes collected from citizens are used to fund important government projects and services such as health, education, infrastructure, and defense.
Additionally, filing income tax returns also helps you to maintain a good financial health. It provides you with a clear picture of your income and expenses, which helps in better financial planning and budgeting. Moreover, it enables you to access various financial services such as loans and credit cards, which require income tax returns as a mandatory document.
Reasons to file tax returns on time
Filing income tax returns within the stipulated timeframe is crucial to avoid any penalties or fines. The following are some of the key reasons why you should file tax returns on time:
- Avoiding penalties: If you miss the deadline for filing income tax returns, you may have to pay a penalty and fine. The penalty for late filing is 1% of the tax payable for each day of delay, up to a maximum of 50% of the tax payable. Moreover, if any other return was last filed in the previous three tax years, the penalty will be double.
- Claiming tax withholdings: If you have tax withheld at source on educational payments, internet/cellular bills, banking transactions, air tickets, etc., you may lose your claim for a refund if you fail to file tax returns.
- Senior Citizen/Full Time Teacher deduction: Senior citizens and full-time teachers are allowed a tax deduction of 25% off their tax liability, which can be claimed via tax returns.
- Property transactions: If you are buying or selling a property, the rates of withholding taxes are double for non-filers. You can only file for a refund by filing income tax returns.
How to file income tax returns?
Filing income tax returns is not as complicated as it may seem. Here are the steps to file income tax returns in Pakistan:
- Register for an account on the Federal Board of Revenue (FBR) website.
- Gather all the necessary documents such as your CNIC, salary slips, bank statements, and other income-related documents.
- Fill out the income tax return form available on the FBR website.
- Submit the form online or manually to the nearest Regional Tax Office (RTO).
In conclusion, filing income tax returns is an important responsibility for every citizen in Pakistan. It helps in contributing towards the development of the nation and maintaining your financial health. Failing to file tax returns on time can lead to penalties and loss of refunds, which can be easily avoided by following the simple steps mentioned above. So, let’s fulfill our duty as responsible citizens and file our income tax returns on time.