FBR notifies taxpayers required to file income tax return 2023

Federal Board of Revenue (FBR) has notified class of taxpayers, who are required to file income tax return for tax year 2023.

The filing of income tax return for the tax year 2023 will end on September 2023. The requirement of tax return will be for salaried persons, business individuals, association of persons and companies falling under special year. The companies having fiscal year will require to file annual return for tax year 2023 by December 31, 2023.

Following is the excerpt of Income Tax Ordinance, 2001 regarding requirement of income tax return filing under Section 114.

Section 114. Income tax return requirement. — (1) In accordance with this Ordinance, individuals falling under the categories listed below must submit an income tax return for a given tax year:–

(a) All companies;

(ab) Any individual (excluding companies) whose taxable income for the tax year exceeds the maximum threshold not liable to tax under this Ordinance for that particular year;

(ac) Any non-profit organization as defined in clause (36) of section 2;

(ae) All individuals whose income for the tax year is subject to final taxation under any provision of this Ordinance;

(b) Any person not falling under clause (a), (ab), (ac) or (ad) who falls under either of the following categories:

(i) has been liable to pay tax for any two preceding tax years;

(ii) claims a loss carried forward in accordance with the provisions of this Ordinance for a given tax year;

(iii) Owns immovable property with a land area of 500 square yards or more, or owns a flat located within the municipal limits that existed before the enactment of Local Government laws in the provinces, areas in a Cantonment or Islamabad Capital Territory;

(iv) Owns immovable property with a land area of 500 square yards or more located in a rating area;

(v) Owns a flat having a covered area of 2000 square feet or more located in a rating area;

(vi) Owns a motor vehicle with an engine capacity exceeding 1000 CC;

(vii) Has obtained a National Tax Number; or

(viii) Holds a commercial or industrial electricity connection with an annual bill amounting to more than PKR 500,000;

(ix) Is a resident individual registered with any chamber of commerce and industry, trade or business association, market committee or professional body, including the Pakistan Engineering Council, Pakistan Medical and Dental Council, Pakistan Bar Council or any Provincial Bar Council, Institute of Chartered Accountants of Pakistan, or Institute of Cost and Management Accountants of Pakistan; or

(x) Is a resident individual required to file a foreign income and assets statement under section 116A.

(c) the Board may notify specific individuals or groups of individuals, subject to the approval of the Minister in-charge.

(1A) Individuals with an income under the category of “Income from business” that is more than three hundred thousand rupees but less than four hundred thousand rupees in a tax year must file a tax return for that year.

(2) A return of income –

(a) shall be in the prescribed form and shall be accompanied by such annexures, statements or documents as may be prescribed:

Provided that the Board may prescribe different returns for different classes of income or persons including persons subject to final taxation;

(b) shall fully state all the relevant particulars or information as specified in the form of return, including a declaration of the records kept by the taxpayer;

(d) shall be accompanied with evidence of payment of due tax as per return of income;

(e) shall be accompanied with a wealth statement as required under section 116; and

(f) shall be accompanied with a foreign income and assets statement as required under section 116A.

(2A) If an individual files a return of income electronically via the internet, magnetic media, or any other computer-readable media specified by the Board, it will be considered a valid return under sub-section (1). The Board has the authority to establish rules, which will be published in the official Gazette, to determine the eligibility of the data in such returns, as well as e-intermediaries who will digitize and electronically transmit the data to the Income Tax Department under their digital signatures. These rules will also address other matters related to the electronic filing of returns, statements, or documents.

(3) The Commissioner has the authority to issue a written notice requiring a person or their representative to file an income tax return by a specific date for a period of less than twelve months, if the following conditions are met:

(a) the person has died;

(b) the person has become bankrupt or gone into liquidation;

(e) the Commissioner otherwise considers it appropriate to require such a return to be furnished.

(4) The Commissioner can issue a written notice requiring any person who, according to the Commissioner’s opinion, should file an income tax return for a tax year or assessment year under this section but has not done so, to file a return within thirty days of receiving the notice. The Commissioner may specify a longer or shorter period for filing the return in the notice or may allow an extension of time. However, this provision is subject to sub-section (5).

(5) The Commissioner has the authority to issue a notice under sub-section (4) for one or more of the last five completed tax years or assessment years. However, if a person has not filed a tax return for any of the last five completed tax years, the notice may cover one or more of the last ten completed tax years. This time limitation does not apply if the Commissioner, based on recorded reasons, is satisfied that the person failed to file a return due to having foreign income or owning foreign assets.

(6) An individual who has filed a return and subsequently discovers any omission or incorrect statement in the return may file a revised return, subject to the following conditions, and sub-section (6A):

(a) The revised return must be accompanied by the revised accounts or revised audited accounts, as applicable. However, the Commissioner may waive this condition if satisfied that filing the revised accounts or audited accounts is unnecessary;

(b) The taxpayer must provide in writing the reasons for revising the return, which should be duly signed and submitted with the revised return;

(ba) The revised return must be accompanied by the Commissioner’s written approval for revision of the return; and

(c) The declared taxable income must not be less than and the declared loss must not exceed the income or loss, as applicable, determined by an order issued under sections 121, 122, 122A, 129, 132, 133, or 221.

If any of the conditions stated above are not met, the furnished return will be considered invalid and will be treated as if it was not submitted. However, the condition mentioned in clause (ba) will not be applicable if a revised return is filed within sixty days of the initial filing.

Additionally, if the Commissioner has not given written approval for a revision of the return within sixty days of the request, the approval required in clause (ba) will be considered granted by the Commissioner and the condition in clause (ba) will not apply.

If any of the following circumstances occur, the condition specified in clause (ba) shall not be applicable and the required approval shall be deemed to have been granted by the Commissioner:

(a) if the Commissioner has not issued a written order of approval for the revision of the return within sixty days from the date of the revision request

(b) or if the taxable income declared exceeds the income determined under section 120 or the declared loss is less than the loss determined under section 120:

Furthermore, the Commissioner is required to grant approval in the case of a genuine omission or incorrect statement

(6A) If a taxpayer, upon noticing a shortfall in tax payment or an attempt to evade tax, voluntarily files a revised return and deposits the necessary tax amount and default surcharge before receiving a notice under sections 177 or sub-section (9) of 122, they shall not be subject to any penalty.

If the taxpayer makes a deposit of the tax amount specified by the Commissioner during an audit or before receiving a notice under sub-section (9) of section 122, they must deposit the amount of tax sought to be evaded, the default surcharge, and twenty-five percent of the penalties leviable under the Ordinance along with the revised return.

Furthermore, if the taxpayer revises the return after receiving a show cause notice under sub-section (9) of section 122, they must deposit the amount of tax sought to be evaded, default surcharge, and fifty percent of the leviable penalties under the Ordinance along with the revised return. Following this action, the show cause notice will become null and void.

(7) Unless proven otherwise, any return that appears to have been made or signed by a person or on their behalf shall be considered to have been properly made by the person or with their authorization.

Note: The above information has been shared only for education purpose.