Tax returns filing declines 12% in 2021

KARACHI: The Federal Board of Revenue (FBR) has registered a decline of 12 per cent in the annual returns filing for the tax year 2021, official documents revealed.

According to the provisional statistics made available to BOL News, the number of return filers for the tax year 2021 fell to 3.04 million, compared with 3.45 million in the preceding tax year.

However, the payment with the return registered a growth of around 33 per cent to Rs70 billion during the tax year 2021, compared with Rs52.74 billion in the tax year 2020, it showed.

The income tax returns filing by individuals both business and salaried persons stood at 2.89 million in the tax year 2021, which is over 95 per cent of the total filing in the tax year under review.

The returns filing by individuals during the period under review fell 12.56 per cent, compared with 3.31 million returns filed during the tax year 2020.

The fall in the returns filing by individuals may be attributed to omitting withholding tax provisions, which were announced in the Federal Budget 2021/22. There are certain withholding provisions, which had required a mandatory return filing for availing reduced rate of withholding income tax.

After the withdrawal of those withholding provisions in the Income Tax Ordinance, 2001, the people were less bothered to file their annual returns of income.

Through the Budget 2021/22, the government announced to omit around 12 withholding provisions of the total 38. In an official note, the FBR said: “This high number of provisions adds to complexity and create undue burden of compliance on different withholding agents. It also impacts the country’s rating on the ease of doing business index.”

The major withholding provisions, which were deleted from the statute, included withholding tax on cash withdrawal; withholding tax on banking instruments; banking transactions other than through cash; collection of tax from persons remitting amounts abroad through credit or debit or prepaid cards; collection of tax on domestic and international air travel, etc.

According to the data, the Association of Persons (AOPs) have filed 79,260 returns for the tax year 2021, compared with 75,665 returns in the preceding tax year, showing a growth of 4.75 per cent.