FBR Powers to Enforce Filing of Returns

FBR struggles to enforce filing of returns

FBR has been struggling to enforce filing of returns over the years. In 2023, the total number of registered taxpayers were around 11.4 million out of which around 5.3 million taxpayers had filed their respective income tax returns. That is less than 50% of the registered taxpayers, however, the figures are more worse when the number of taxpayers who are required to register but have not yet registered are included.

FBR steps to encourage return filing

The following steps have been taken to encourage the filing of Income Tax Returns.

Increase in withholding tax/ advance tax rates

The withholding tax and advance tax has been increased for non-filers. In majority of the cases, it has been doubled.

This amendment was made to incentivise filing of returns and penalise non-filers. However, this has not led to any success.

Powers to enforce filing of returns

FBR has been looking for new ways to enforce the filing of returns and had introduced Section 114B in the Income Tax Ordinance, 2001, through Finance Act 2022. Through this section, it has now the power to do the following, in case of non-filers;

• Disable mobile phones and SIMS
• Discontinue electricity connection
• Discontinue gas connection
• Restrict foreign travel

FBR is hoping that these powers will help them tackle the problem. However, the issue is a matter of debate and only time will tell.