ISLAMABAD: In the wake of outstanding results in terms of enhancing the tune of revenue collection and number of fillers in last five years, the Federal Board of Revenue (FBR) will continue the policy of different tax rates from filers and non-filers in the coming fiscal year.
Since the introduction of this policy during Tax Year 2013 the number of filers of income tax returns witnessed an increase of 54.03%. Moreover, the increased withholding tax rates for non-filers have contributed positively towards revenue emanating from withholding taxes.
The FBR, since 2013, has espoused the policy of introducing higher withholding tax rates for non-filers across a wide spectrum of transactions in a bid to broaden the tax base by increasing the cost of doing business for non-filers who are noncompliant taxpayers.
“The purpose behind introducing higher withholding tax rates for non-filers was, firstly, to compel such non-filers to start filing their tax returns to avoid higher incidence of withholding taxes and secondly to procure information regarding non-filers so that efforts could be made to bring them within the fold of the tax net. It would also be beneficial to mention that if non-filers opt to file their income tax returns they can claim the tax withheld (at higher rates) against their tax liability” a source at FBR told Customs Today.
In view of the above, the source said that FBR would continue with the policy of charging higher rates of withholding tax from non-filers so as to fortify the efforts geared towards broadening of the tax base. The introduction of the policy of having higher withholding tax rates for non-filers has complemented the efforts of the FBR with respect to broadening of the tax base.
The source said that the number of filers of income tax returns witnessed a successive increase since the implementation of this policy as many non-filers, previously out of the tax net, have opted to file their income tax returns to avoid higher incidence of withholding taxes.