Tough rules on the anvil for tax returns, wealth statement

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ISLAMABAD: The Federal Board of Revenue is considering to make some changes in the income tax return form for the tax year 2013.

A senior FBR official told Dawn on Wednesday that amendments would be made in the form because of changes introduced in the income tax law in the 2013-14 budget.

The official said that all salaried and non-salaried taxpayers would have to file tax returns and wealth statements from tax year 2013 irrespective of the income or value of the assets.

The official said that the filing of wealth statement and wealth reconciliation statement would be made mandatory for all taxpayers.

The law does not exempt any taxpayer — salaried or non-salaried — from filing of tax returns because exemption threshold for filing returns has been done away with.

The official said the exemption threshold of Rs400,000 would be there for individuals only in terms of income tax assessment, but the filing of tax returns was mandatory across the board, whether income tax was deducted or not in a tax year.

Earlier, employers’ statement about deduction of income tax from salary was accepted as tax return for salaried people with income of up to Rs500,000. This relaxation is no more there for low salaried people who also have to file tax returns and wealth statement.

The limit of Rs1 million or more (declared income or assessed for filing of wealth statement) has also been done away with.

As a result, it is now mandatory for all individuals to file a return of income along with wealth statement and wealth reconciliation statement, irrespective of the income threshold.

Everyone under the final tax regime has also been asked to file wealth statement irrespective of the amount of tax paid.

Currently, filing of wealth statement was mandatory only where the amount of tax paid was Rs35,000 or more in the final tax regime.

The provision of revised wealth reconciliation and disclosure of reasons at the time of filing of revised wealth statement was also introduced in the budget.

Only 800,000 people filed tax returns, including employer statements in tax year 2012.

Similarly, the official said that in the business return form the filing of balance sheet would be made mandatory for the business community.

According to the official, the Annex-D introduced last year with income tax return form was postponed till June 30 this year but it has now been made part of the income tax law. He said that implementation on the Annex-D-seeking details of personal expenses of an individual would be enforced from tax year 2014.

In order to bring professionals and business community in the tax net, it has been made mandatory for all people registered with certain bodies to file tax returns irrespective of the type and quantum of their income.

This decision would apply to all chambers of commerce, trade or business associations, market committees, professional bodies, including Pakistan Engineering Council, Pakistan Medical and Dental Council, Pakistan Bar Council or provincial bar councils, Institute of Chartered Accountants of Pakistan or Institute of Cost and Management Accountants of Pakistan.

The limit for the amount of annual bill in case of commercial or industrial electricity connection has been reduced to Rs500,000 from Rs1m for the filing of tax returns. This would help document such businesses in the tax net.

For enforcement of the rules, the government has enhanced powers of income tax commissioners who can ask any person to file a return about income during the current year or last five years without any specific time period.

All taxpayers declaring agricultural income in tax returns will have to provide evidence of tax paid on the income to the provincial revenue department.

Unexplained income or assets will be liable to be included in a person’s income chargeable to tax in the tax year.The FBR will also allow CNIC issued by Nadra in place of National Tax Number (NTN).

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