What is filer and non filer in Pakistan

Introduction

In a country’s progress, the taxation system plays an important role. In Pakistan, filer and non filer impact the taxation system directly. The major difference between filer and non filer is how this affects their finances and various aspects of life, for those who comply with filing tax requirements enjoy many benefits. Understanding this difference is essential for individuals and businesses as it impacts everything from taxes to financial opportunities.

A Filer in Pakistan

A filer submits income tax returns annually to the Federal Board of Revenue (FBR) on an individual level or as an entity. To become a filer, one must declare all his taxable income, property, expenses, and all relevant financial information. Income tax filing is a legal obligation on all individuals in a country who fall in this category. It supports the national economy as it contributes to generating government revenue. 

Who is a Non-Filer in Pakistan?

A non-filer is someone who does not file their annual income tax return, which is necessary to fulfil the requirements of submitting the income tax. They only face disadvantages in terms of various legal and financial benefits. Non-filers are subjected to paying a higher tax rate on everything. The Government of Pakistan has taken measures to encourage compliance and penalize non-compliance to ensure a strong taxation system for tax collection.

Benefits of Being a Filer in Pakistan

There are many benefits to being a filer in Pakistan, as well as penalties for non-filers. In this blog, we will discuss some significant highlighted points:

Minimum Withholding Tax

Major benefit of a filer is minimum withholding tax rate. On different transactions they get the benefits of reduced withholding tax rate i.e. bank transactions, property sale purchase, vehicle registration, and investment on different saving schemes.

On the other hand, a non-filer must pay higher tax rates as compared to a filer.

Easy Access to Financial Services

Filers have easy and trustworthy access in every organization. They enjoy better access to all financial services, i.e., taking loans, credit cards, and mortgages. Government organizations like banks and other financial institutions prefer to deal with filers more than non-filers as filer indicates stability and financial transparency.

No Penalties

Filers will not face any penalties for compliance. On the other hand, non-filers face more penalties and fines for non-compliance. To avoid these penalties, filers must submit their income tax returns on time.

Eligible for Gaining Government Trust

The benefits of being a filer in Pakistan are that they are eligible to take part in government tenders and contracts as they are trustworthy. This way, many business opportunities are unlocked compared to non-filers, who are inaccessible.

National Responsibility and Contribution

As a responsible citizen of Pakistan, filing taxes is considered a crucial duty. It only contributes to the nation’s economic growth and development by generating revenue for the government. These funds are then used for infrastructure, education, healthcare, and other public services.

Documentation and Financial Planning

Regular tax filing helps maintain a proper financial record of the taxpayer. This makes it easier to plan personal finances and ensures that the proper documentation is available for future references, such as audits, visa applications, etc.

Inclusion in ATL (Active Taxpayer List)

FBR maintains official public records of Filing. By filing taxes, it ensures inclusion in the Active Taxpayer List (ATL), which is important for various tax-related interests. 

Privileges for Income Tax Filer

In our country, Pakistan, there are many benefits of income tax return filing. Filers can enjoy various opportunities and incentives other than those of non-filers. Tax-paying individuals can significantly minimize their tax liabilities. Following are some main advantages of becoming a filer and income tax return filing in Pakistan: 

1. If a filer buys immovable or movable property like a house, plot, or vehicle, he pays half the tax on everything compared to non-filers. A non-filer must pay the double amount of tax. 
2. Income tax filers can easily adjust taxes paid on purchases such as immovable properties and vehicles. Pakistanis outside the country are exempt from income tax and can claim tax refunds for these items.
3. Filers pay only 5.5% tax on imported items, and non-filers must pay 8%.
4. Filers can purchase property of any value, but non-filers can only buy property worth less than PKR 50 lakhs.
5. Filter pays a 6% duty tax on commercial exports, whereas non-filers pay 9%.
6. Filers are taxed 15% on bank profit and saving schemes, whereas non-filers are taxed 30%.
7. On property purchase, the filer and non filer pays 1% and @% tax respectively. 
8. On prize bonds, winning filer and non filer pay 15% and 30% tax individually. 

Become a Filer and Encourage Compliance

After knowing these benefits, some may be encouraged to become filers from non-filers. Filing taxes can only reduce the burden from one’s shoulders, and as a responsible citizen, one must promote compliance. The filer can ultimately get more respect. They not only enjoy the financial benefits but also get the recognition of being responsible and respectable citizens by contributing to national progress and economic stability.  

Explore: Penalties for Non-Filers According to the Latest 2024 FBR Laws

Conclusion

In this blog, we discussed the basics of filer and non filer meaning and number of filer benefits in Pakistan. The difference between filers and non filers in Pakistan has significant financial and legal implications. We have compared these differences between filer and non filer and how important it is to become a filer and pay taxes on time. Being a filer in Pakistan can save one from unnecessary penalties and fines, lower tax rates, save money, and give a better and more straightforward approach to accessing services. It helps you play an integral part in the country’s growth and development, improve the tax system, and stay compliant. By becoming a taxpayer, you are securing your future and contributing to building a more robust and better Pakistan for the upcoming generation.