ISLAMABAD: In the wake of poor response in filing of tax returns in tax year 2013, the government has exempted the filing of wealth statement and wealth reconciliation statement for taxpayers having less than Rs1 million of income or value of assets.

To further facilitate them, the government has also reduced the minimum penalty charges from Rs50,000 to Rs10,000 for late filers of these statements.

Since the announcement of the federal budget in June, the government has so far reversed most of its decisions announced for the documentation of economy.

As per Wednesday’s decisions taken through SRO978 of 2013, filing of wealth statement is no more mandatory for all taxpayers.

“Only those people will file tax returns who have an income or value of assets more than Rs1m,” a government notification said.

In the budget 2013-14, the government had vowed to make all people bind for filing of wealth statement and wealth reconciliation statement irrespective of their income.

As per decision taken in the budget 2013-14, taxpayers having an income more than Rs500, 000 will have to file tax returns electronically.

Until recently, only 53,000 individuals have filed their income tax returns despite two months extension in last date from Sept 30 to Nov 30, highlighting that a negligible number of people filed the tax returns electronically.

In the budget, government has also decided that everyone under the final tax regime would be asked to file wealth statement irrespective of the amount of tax paid.

After Wednesday’s decision, filing of wealth statement is now only mandatory where the amount of tax paid is more than Rs35,000 in the final tax regime. The wealth statement is no more mandatory where the amount of tax paid was less than Rs35,000.

It is worth noting that last year 711,000 people filed their tax returns electronically.

The minimum penalty for failure to furnish statements---presumptive, withholding and banker access---has been reduced to Rs10,000 from Rs50, 000. The government had increased the penalty charges from Rs5,000 to Rs50,000 in a bid to make maximum people file tax returns as part of the documentation of the economy.

More than 3.3m tax payers exist on the tax roll of the Federal Board of Revenue, but e-filing of returns so far is just one per cent.

As per income tax law, filing of tax returns is mandatory for all those who possess a 1000cc car or a plot of 250 sq yd or 2000 sq ft flat in any municipal corporation in the country. The number of such people is in millions but low filing shows poor enforcement and compliance of the tax department.

However, there is a lukewarm response from business community in filing of their tax returns. There are 62,000 companies registered with the Securities and Exchange Commission of Pakistan (SECP) while only 280 companies have filed tax returns.