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All you need to know about Filer and Non-filer in Pakistan

All you need to know about Filer and Non-filer in Pakistan

All you need to know about Filer and Non-filer in Pakistan. According to the tax laws of Pakistan, there are many differences between a filer and a non-filer. Common citizens of Pakistan raise many questions about this concept. For instance:

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  • what is an income tax filer and a non-filer in Pakistan.
  • What is the process for becoming a tax filer in Pakistan?
  • Why should one become a filer?
  • What are the benefits from becoming a filer?
  • What are the consequences of not becoming tax filer ?

This blog here aims to answer all the detailed questions for the general public.

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What do you mean by the terms “Income Tax Filer and a Non Filer” in Pakistan?

Under the Income Tax Ordinance 2001, the FBR introduced the concept of the filer and non-filers. Withholding tax is charged at the normal rate in the case of the filer and double tax in the case of the non-filer. Many tax benefits are available to tax filers in Pakistan. Tax filers have to pay reduced taxes on the purchase of property and vehicles. It was introduced to increase the tax net in Pakistan.

What is the Difference Between a Filer and a Non-Filer?

What is the difference between a Filer and a Non-filer? Non-filer is a person who is not registered with FBR or he has a National Tax Number (NTN) but is not filing tax returns routinely. On the other side tax filer is a person who is registered with FBR and owns NTN and also files tax returns in routine.

Who is an Income Tax Filer?

Filers are those individuals listed on the “Active Taxpayer” list compiled by the IRS. Every taxpayer has to submit his annual income tax return through FBR’s online portal IRIS (https://iris.fbr.gov.pk/public/txplogin.xhtml) to appear on the list of Active Taxpayers, which is known as Active Taxpayer List (ATL). 

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Who is a Non-Filer?

A non-filer is a taxpayer who is neither registered with the Federal Bureau of Revenue (FBR) nor has a valid NTN, or whichever is the case if they are registered with the FBR and have a valid NTN as well as an income tax return, but do not file yearly tax returns.

What does it mean to be a tax filer in Pakistan?

The IRS declares filers as taxpayers who appear on its list of “Active Taxpayers.” To appear on this list, tax filers must submit their annual income tax returns via FBR’s online portal IRIS. FBR considers them as a filer because they file tax returns on an annual basis.

Who is a non-filer in Pakistan?

A non-filer is an individual who has not registered himself with the FBR and thus does not have an NTN number or an NTN number but does not pay his income tax and does not file his annual income tax return. The FBR also refers to them as non-filers because they fail to file tax returns.

Active-Tax-payer-benefits-filer. All you need to know about Filer and Non-filer in Pakistan.

Benefits of becoming tax filer?

The benefits of becoming a filer include the following:

  • Filers has to pay reduced tax rate on purchase of property
  • Lower tax rate on prize bonds winning
  • Withholding tax rate increased by 100% for non-filers, so filer gets benefit.
  • Filers has to pay reduced tax rate on purchase of vehicles
  • On filers, dividend taxes are lower.
  • Seller of goods only have to pay normal rate of tax instead of 100% increase in case of non filer.
  • Provider of services only have to pay normal rate of tax instead of 100% increase in case of non filer.
  • Lower tax rate on bank profits (15% for filer and 30% for non filer)
  • Reduced tax rate is applicable on execution of contracts
  • Lower tax rate on payments to non residents against royalties and fees as compare to tax rate for non filers
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Disadvantages of being a Non-Filers

There are many disadvantages to being a non-filer, some list is here:

  • Higher tax rates on purchase of property
  • Start of audit proceedings on purchase of property and vehicles if buyer is non filer
  • Higher tax rate on purchase of vehicles 
  • Withholding taxes are higher for non-filers.
  • Tax rates on prize bonds are higher for non-filers.
  • Dividends received by non-filers tax at a higher rate.
  • Due to taxes on tokens, registration rates for vehicles are higher on non-filers.
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