Karachi, December 24, 2023 – Pakistan has updated its list of mandatory tax return filers in a move to enhance fiscal transparency and broaden the tax base.
The Federal Board of Revenue (FBR), the apex tax agency in Pakistan, has issued a comprehensive list specifying individuals and entities obligated to file income tax returns.
According to Section 114 of the Income Tax Ordinance, 2001, the following categories of individuals and organizations are now mandated to submit a return of income:
1. Companies: Regardless of financial conditions, including those earning exempt income or in the startup stage, every company is obligated to file a tax return.
2. Associations of Persons and Individuals: Individuals with an annual income exceeding Rs. 600,000, along with salaried individuals whose annual salary exceeds Rs. 600,000, are required to file tax returns.
3. Immovable Property Owners: Individuals owning properties with specific criteria, such as land area exceeding 500 sq. yards in municipal limits, a Cantonment Board, or Islamabad Capital Territory, are mandated to file tax returns. This includes those owning flats with specified land or covered area conditions.
4. Motor Vehicle Owners: Individuals owning a motor vehicle with an engine capacity of 1000 cc or more must file income tax returns.
5. National Tax Number Holders: Individuals who have obtained a National Tax Number are obligated to file tax returns.
6. Electricity Consumers: Individuals holding a commercial or industrial connection of electricity with an annual bill exceeding Rs. 500,000 are included in the mandatory tax return filers.
7. Resident Individuals: Individuals required to file a foreign income and assets statement must also submit their income tax returns.
8. Registered Entities: Resident individuals registered with various professional bodies, including chambers of commerce and industries, trade or business associations, market committees, and specific councils such as Pakistan Engineering Council, Pakistan Medical and Dental Council, Pakistan Bar Council, Institute of Chartered Accountants of Pakistan, or Institute of Cost and Management Accountants of Pakistan, fall under the mandatory tax return filing category.
9. Non-profit Organizations: All non-profit organizations, without any specific conditions, are now required to file income tax returns.
10. Final Taxation Subjects: Individuals whose income for the year is subject to final taxation are mandated to file tax returns.
The FBR’s updated list aims to ensure transparency and compliance within the taxation system. Failure to adhere to the filing requirements may result in penalties and other consequences. The government’s commitment to expanding the tax base and enhancing revenue collection for critical public services and socio-economic development initiatives is evident in these revised guidelines. Taxpayers falling under these categories are strongly urged to promptly fulfill their filing obligations to avoid any legal implications.
