Budget proposes punitive actions against non-filers

KARACHI: The government has proposed punitive actions against people who are not included in the active taxpayers list (ATL) and might slap 100 percent tax on income or assets to prompt filing of returns, officials said on Wednesday.

The government proposed through Finance Bill 2019 to levy 100 percent tax on individuals who don’t appear on the ATL.

The bill changed the terminology of non-filers of income tax returns to people not appearing on ATL.

The Federal Board of Revenue (FBR) said presently the law has higher withholding rates on non-filers, which are adjustable at the time of filing of income tax returns. This tax regime has created a misconception that a non-filer could go scot-free for not filing income tax returns.

The higher withholding tax was meant to increase the number of filers, but the focus was stuck to raising additional revenue. “The measure has not achieved the desired results as the present regime does not provide any legal framework to ensure filing of returns by such non-filers,” the FBR said.

“In order to remove the misconception, the concept and the term of non-filer is being abolished from the Income Tax Ordinance, 2001.” The FBR said a separate law has been proposed for punitive measures against individuals not appearing on the ATL to force the non-compliant taxpayers to file returns.

The FBR said exemption from increased tax rate for non-ATL people was provided under various provisions of the Income Tax Ordinance 2001. Certain liabilities were proposed to be increased on the withholding agents to provide comprehensive details of non-compliant taxpayers.

The FBR said withholding tax agents would be required to clearly specify the names, computerised national identity card or any other identification of non-filers in the withholding statement to let the tax authorities invoke legal provisions for enforcement.

“Where a withholding agent is of the opinion that hundred percent increased tax is not required to be collected on the basis that the person is not required to file returns, the withholding agent shall furnish an intimation to the commissioner,” the FBR said.

“Where the person’s tax has been deducted or collected at hundred percent increased rate and the person fails to file return of income for the year for which tax was deducted, the commissioner shall make a provisional assessment within 60 days of the due date for filing of returns by imputing income so that tax on imputed income is equal to the hundred percent increased tax deducted or collected from such person and the imputed income shall be treated as concealed income.”

The FBR said the provisional assessment would be of no effect if an individual files return within 45 days of completion of provisional assessment “and the provisions of the ordinance shall apply accordingly”.

“Where return is not filed within 45 days of provisional assessment, it shall be treated as

final assessment and the commissioner shall initiate penalty proceedings for concealment of income.”