Income Tax Ordinance 2001: FTR taxpayers not required to file returns

KARACHI: Taxpayers falling under final tax regime are not required to file income tax returns under Section 114 of Income Tax Ordinance, 2001.

According to updated Income Tax Ordinance, 2001 issued by the Federal Board of Revenue (FBR), the law relaxed the condition of filing income tax returns under Section 114 to taxpayers falling under FTR

The ordinance through Section 169 prescribed the tax collection and deduction as a final tax.

Section 169: Tax collected or deducted as a final tax.

Sub-Section (1): This section shall apply where —

(a) the advance tax required to be collected or paid is a final tax under sub-section (7) of section 148,148A or section 234A on the income to which it relates; or

(b) the tax required to be deducted is a final tax under sub-section (3) of section 151, sub-section (1B) or sub-section (1BB) of section 152, sub-section (3) of section 153, sub-section (1AAA) of section 152, sub-section (4) of section 154, sub-section (3) of section 156, sub-section (2) section 156A or sub-section (1) and (3) of section 233 on the income from which it was deductible.

Sub-Section (2): Where this section applies —

(a) the income shall not be chargeable to tax under any head of income in computing the taxable income of the person;

(b) no deduction shall be allowable under this Ordinance for any expenditure incurred in deriving the income;

(c) the amount of the income shall not be reduced by —

(i) any deductible allowance under Part IX of Chapter III; or

(ii) the set off of any loss;

(d) the tax deducted shall not be reduced by any tax credit allowed under this Ordinance;

(e) there shall be no refund of the tax collected or deducted unless the tax so collected or deducted is in excess of the amount for which the taxpayer is chargeable under this Ordinance; and

(f) tax deductible has not been deducted, or short deducted, the said non-deduction or short deduction may be recovered under section 162, and all the provisions of this Ordinance shall apply accordingly.

Sub-Section (3): Where all the income derived by a person in a tax year is subject to final taxation under the provisions referred to in sub-section (1) or under sections 5, 6 and 7 an assessment shall be treated to have been made under section 120 and the person shall not be required to furnish a return of income under section 114 for the year.

Explanation.— The expression, “an assessment shall be treated to have been made under section 120” means,—

(a) the Commissioner shall be taken to have made an assessment of income for that tax year, and the tax due thereon equal to those respective amounts specified in the return or statement under sub-section (4) of section 115; and

(b) the return or the statement under sub-section (4) of section 115 shall be taken for all purposes of this Ordinance to be an assessment order.

Sub-Section (4): Where the tax collected or deducted is final tax under any provision of the Ordinance and separate rates for filer and non-filer have been prescribed for the said tax, the final tax shall be the tax rate for filer and the excess tax deducted or collected on account of higher rate of non-filer shall be adjustable in the return filed for the relevant tax year.

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