ISLAMABAD: Persons who have failed to submit their annual income tax returns and declaration of assets for tax year 2019 will pay 100 percent additional withholding tax on certain transactions, sources in Federal Board of Revenue (FBR) said on Monday.
They said that those taxpayers availing the benefit of reduced rate of withholding tax on the basis of returns filed for tax year 2018 would not more eligible.
The FBR issued new Active Taxpayers List (ATL) for tax year 2019 including names of those return filers who filed their returns up to February 29, 2020.
The new ATL included name of 2.53 million taxpayers who filed their returns for tax year 2019. These taxpayers were salaried persons, business individuals, Association of Persons (AOPs) and companies.
The FBR had extended the last date for filing income tax returns and declaration of assets up to February 28, 2020.
The sources said that through Finance Act, 2019 a new 10th Schedule to Income Tax Ordinance, 2001 was introduced under which the FBR imposed 100 percent additional withholding tax on those persons whose name were not on the ATL.
Previously, the law provides for the concept of a non-filer and stipulates higher withholding rates for the same which were adjustable at the time of filing of income tax return.
This tax regime has created a misconception that a non-filer can go scot free by choosing not to file income tax return.
The measure was meant to increase the number of filers, however over time the focus shifted to raising additional revenue only.
The measure had not achieved the desired results as the regime did not provide for any legal framework to ensure filing of return by such non filers.
In order to remove the aforesaid misconception, the concept and the term of “non-filer” was abolished from the statute, wherever occurring.
In its stead a separate Schedule is being introduced to specifically provide a legal framework for punitive measures for persons not appearing on ATL and to ensure filing of return by such persons.