In a worrying development, the number of active taxpayers has dropped by 30% or 935,000 to just 2.2 million, the fact revealed in Federal Board of Revenue (FBR) list of active taxpayers released on Monday.
The 2.2 million tax return filers were only one-third of those who have valid National Tax Numbers (NTNs). They were doing business in Pakistan but did not file tax returns. This means that two out of every three people who have a valid NTN and are doing business have not submitted their annual income tax returns for the Tax Year 2020. For the tax year 2020, the list of Active Taxpayers (ATL) 2021 includes the names of 2.178 million individuals and companies, according to the list released by the FBR on Monday.
Non filers of tax returns for 2020 increased
Active Taxpayer List (ATL) 2021 replaced ATL 2020 with 3.12 million names of individuals and companies. A comparison of the two lists reveals that more than 932,000 names are missing from the new list. Under tax laws, individuals and companies who are on the active list are entitled to a standard income tax rate and those who are not on the list have to pay double the standard rate on various activities such as business transactions, property purchase / sale and car purchases.
It is a matter of concern that people are willing to pay 100% higher taxes on their transactions. But they are not ready to be part of the tax system. About 500,000 people submitted their Income Tax Returns after the due date. But did not pay the penalty for becoming filer, thus their names excluded from the ATL.
FBR Issued Tax Notices
The FBR said it issued notices to approximately 2.2 million taxpayers. Who had to file returns, or filed nil returns, or misrepresent their assets. According to media reports FBR is about to lose its annual tax collection target. The International Monetary Fund (IMF) has agreed to reduce this target by about Rs 263 billion.