FBR Urged to Ensure Strict Return Filing Compliance Among Professional Body Members

FBR Urged to Ensure Strict Return Filing Compliance Among Professional Body Members

The Federal Board of Revenue (FBR) has received recommendations to strengthen the enforcement of income tax return filing by members of professional bodies.

The Revenue and Reform Mobilization Commission (RRMC), in its proposals for the budget of 2023-2024, highlighted the provision under Section 114(1)(b)(ix) of the Income Tax Ordinance, 2001, which mandates resident individuals registered with professional bodies to file income tax returns. Despite this requirement, a significant number of professionals fail to comply with filing returns, resulting in substantial revenue losses for the country. To address this issue, the RRMC recommends strict enforcement measures and the utilization of existing information available to the FBR or data obtained from recognized professional bodies.

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The RRMC emphasizes the need to strictly enforce the provision outlined in Section 114(1)(b)(ix) of the Income Tax Ordinance, 2001. To achieve this, the FBR is urged to leverage the information already present in its records, which can be categorized based on the professions declared by individuals in Form 181. Additionally, the FBR may also seek data from recognized professional bodies to identify individuals who are non-compliant with income tax return filing.

In some countries, individuals are required to disclose their professional memberships or employment status on their tax returns. Australia serves as an example where the Australian Taxation Office (ATO) mandates individuals, including accountants, lawyers, and doctors, to declare their professional memberships when filing tax returns. This disclosure is crucial as professional body memberships may influence eligibility for specific tax deductions or other tax benefits.

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By ensuring strict compliance with income tax return filing among members of professional bodies, the FBR can achieve several benefits. First and foremost, it will lead to increased revenue collection for the country, minimizing the loss caused by non-filers. Moreover, it will promote transparency and fairness in the taxation system by closing the gap between those who fulfill their tax obligations and those who do not. Additionally, strict enforcement will help maintain a level playing field among professionals and discourage tax evasion practices.

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The FBR has been advised to strengthen its enforcement efforts to ensure the filing of income tax returns by members of professional bodies. By strictly enforcing the existing provision and utilizing available information, the FBR can identify non-compliant individuals and take appropriate measures to address the issue. Following international practices, such as disclosing professional memberships on tax returns, can serve as a valuable reference for enhancing compliance. Through these measures, the FBR aims to enhance revenue collection, promote fairness, and maintain the integrity of the taxation system in Pakistan.

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