FBR has introduced a holding tax for non-filers to double rates as compared to filers withholding tax under the Income Tax Ordinance 2001 to differentiate between filer and non-filer in Pakistan.
A person who is not registered with (FBR) as an active taxpayer and does not files income tax returns annually is known as “Non-Filer”.
Purpose of Differentiating between Filer and Non-Filer:
The basic purpose of differentiating filer and non-filer in Pakistan categories is to Increase the tax base and also to punish those who do not file their tax returns, the Finance Act 2014 imposed higher taxes for non-filer. The tax of non-filers is being tightened every year to force them to become filers.
- Filers have to pay less with-holding tax.
- No restrictions on filers from purchasing or importing motor vehicles.
- Filers can purchase any property without any restrictions.
- Filers have to pay fewer tax rates on prize bonds.
- Filer pays a 15% tax on their dividends.
Disadvantages of Non-Filer:
- Ban on non-filers from purchasing or importing motor vehicles according to The Finance Bill – 2018 and local carmakers have already implemented and notified it.
- Ban on non-filers from purchasing a property worth more than Rs one lakh. 4 million.
- Non-Filers have to pay higher withholding taxes.
- Non-Filer has to pay higher tax rates on prize bonds.
- Non-Filer pays 20 percent tax on their dividends.
- Higher rates on the registration of vehicles and taxes on tokens.
Nowadays, with the advent of information technology (IT) facilities, becoming a filer is not so difficult. The FBR has introduced a number of facilities in this regard which help people to easily become filers and file their tax returns. A person has to register a National Tax Number (NTN) before filing a tax return or registering for an ATL. You can register for NTN by visiting “iris.fbr.gov.pk” without visiting the tax office.