Karachi, October 21, 2024 — The Federal Board of Revenue (FBR) is poised to terminate the active status of approximately 6.1 million taxpayers as a result of recent amendments introduced to the Income Tax Rules, 2002. These changes will impact taxpayers who fail to meet the deadline for filing income tax returns for the tax year 2024.
According to the FBR’s amendments, the active taxpayer status for the tax year 2023 will expire on the last date for filing income tax returns for the 2024 tax year. This deadline, currently set for October 31, 2024, may mark a significant shift in tax compliance as the FBR moves to enforce stricter timelines.
READ: FBR to Launch New Active Taxpayers List on November 1, 2024
If the FBR adheres to the October 31 deadline, the Active Taxpayers List (ATL) for the tax year 2023 will automatically expire on the same day, and a new ATL for the tax year 2024 will be issued on November 1, 2024. This change in timing represents a departure from the FBR’s previous practice of releasing the ATL annually on March 1st, based on returns filed by the end of February. The new amendment reflects the FBR’s intention to introduce a more dynamic, responsive system, ensuring timely updates to the ATL.
The latest ATL, issued on Monday, October 21, 2024, shows that around 6.1 million taxpayers currently hold active status. However, those who fail to submit their returns for the 2024 tax year by the stipulated deadline risk losing this status, unless they secure prior approval from the Commissioner of Inland Revenue. Late filers will have the opportunity to be added to the ATL, but only after paying a surcharge.
Historically, the FBR has been more lenient with deadlines, offering extensions to accommodate the public. The original deadline for tax year 2024 was set for September 30, 2024, but was extended twice—first to October 14, 2024, and then to October 31, 2024. Despite the extensions, FBR insiders suggest that further leniency is unlikely. As a result, the release of the new ATL on November 1, 2024, seems highly probable.
The significance of being on the ATL cannot be overstated. Individuals and businesses whose names are included benefit from reduced withholding tax rates on various transactions and are eligible to participate in public procurement processes. The ATL serves as a certification of compliance with tax obligations, providing financial advantages to those who file on time. Non-compliance, however, results in financial disadvantages, such as higher withholding taxes on income, banking transactions, and purchases.
A key feature of the latest amendments is the shift from weekly to daily updates of the ATL. This change is expected to ensure a more accurate and real-time reflection of compliance. Taxpayers who miss the October 31 deadline but later file their returns and pay the surcharge will be promptly added to the ATL, allowing them to restore their active status with minimal delay.
Moreover, the FBR has introduced provisions for companies and associations of persons (AOPs) established after June 30, 2024. These entities will automatically be included in the ATL, even though their tax returns are not yet due. This inclusion allows new businesses to take advantage of the active taxpayer status without waiting for the next filing cycle.
The amendments also extend to taxpayers filing returns in Azad Jammu and Kashmir (AJK) or Gilgit-Baltistan (GB). Taxpayers in these regions who have filed returns with their respective revenue boards will be included in the national ATL, provided they maintain temporary or permanent addresses in these territories.
The FBR’s swift issuance of the ATL, following the deadline, underscores its commitment to improving tax compliance and modernizing Pakistan’s tax infrastructure. By transitioning to a more agile and real-time system, the FBR aims to promote greater transparency and accountability in the nation’s tax administration.
As the deadline approaches, businesses and individuals are urged to file their returns promptly to avoid losing active taxpayer status. While the option to pay a surcharge and restore one’s name on the ATL remains, the financial and administrative benefits of timely filing far outweigh the consequences of exclusion. In this new era of tax compliance, the FBR’s reforms promise to enhance fiscal responsibility and contribute to the country’s economic stability.