ISLAMABAD: The number of income tax return filings has surged to a record level of 2.68 million for the tax year 2018, according to the latest statistics compiled up to November 17, 2019.
As per the weekly Active Taxpayers List (ATL), the number of tax return filers increased to 2.683 million by November 17, 2019, compared to 2.676 million recorded on November 10, 2019. This marks a significant 46 percent growth in tax return filings for tax year 2018 compared to 1.84 million filings received by the Federal Board of Revenue (FBR) for tax year 2017.
Being included in the ATL ensures a lower rate of withholding tax for various financial transactions. The Finance Act, 2019 introduced the Tenth Schedule to the Income Tax Ordinance, 2001, stipulating that individuals not listed on the ATL—despite having filed their tax returns—are still liable to pay 100 percent additional withholding tax.
The FBR issues the ATL every year on March 1, based on tax return filings submitted within the due date for the relevant tax year. The latest ATL, released on March 1, 2019, was compiled from tax return filings for tax year 2018. Since the return filing deadline for tax year 2018 was extended to August 9, 2019, taxpayers who filed within this period were added to the updated ATL.
By August 9, 2019, the number of tax return filers had risen to 2.5 million. An additional 0.167 million returns were later submitted along with a late filing surcharge. The FBR clarified that the restriction on ATL inclusion for those filing tax returns after the due date was introduced through the Finance Act, 2018. However, the Finance Act, 2019, modified the rule to allow inclusion in the ATL even if tax returns were filed late, subject to a surcharge.
The surcharge for late inclusion in the ATL is Rs1,000 for individuals, Rs10,000 for Associations of Persons (AOPs), and Rs20,000 for companies. According to FBR sources, many individuals continued filing their income tax returns for tax year 2018 along with the late surcharge, even though the deadline for tax year 2019 had already been set. This was primarily to avoid the 100 percent withholding tax penalty.
The FBR also confirmed that the current ATL would remain in effect until February 29, 2020, after which a new ATL, based on tax return filings for tax year 2019, would be issued on March 1, 2020. Taxpayers are encouraged to file their tax returns timely to avoid late surcharges and higher withholding tax rates.