In a decisive move to tighten the noose around tax dodgers, the Federal Board of Revenue (FBR) has finalized a groundbreaking legal proposal aimed squarely at ‘nil filers’ — individuals and entities who submit income tax returns with zero declared income solely to gain benefits of the Active Taxpayers List (ATL).
According to official sources, the FBR is actively drafting a new law set to be unveiled as part of the Finance Bill 2025, accompanying the upcoming Budget 2025-26. The objective is to close the loophole that allows filers with no actual tax liability to misuse their ATL status and enjoy reduced or exempted withholding tax rates.
Stakeholders had earlier raised red flags over the growing trend of nil filing by individuals, Associations of Persons (AOPs), and companies. These filers, despite having taxable assets or income, submit zero-income returns just to appear on the ATL and sidestep financial scrutiny. The FBR now intends to introduce stringent checks on such returns — particularly where withholding tax deductions exceed Rs. 20,000 in a tax year — to pinpoint and pursue potential tax evaders.
Moreover, the FBR is planning to analyze nil filers’ asset purchases and lifestyle indicators to cross-match with their declared income. If discrepancies are found, the ATL status could be revoked, and heavy penalties imposed.
The draft law also aims to combat the phenomenon of stop-filers — those who benefit from ATL status temporarily and then disappear from the tax net. Currently, there’s no automatic mechanism to track or penalize these individuals once they exit. Under the proposed rules, any benefits gained prior to becoming a stop-filer would be reversed and made subject to penalties.
In addition, the FBR is considering procedural reforms to make it harder to exit the tax system. This would ensure that filers remain compliant and do not abuse the ATL framework for short-term gain.
This new legislation marks a significant step in strengthening tax enforcement and ensuring that the privileges of ATL filers are reserved for genuine, consistent taxpayers.