How to File Income Tax Returns in Pakistan?
An income tax return is a document in which you give a detailed picture of earnings, profits and losses of your business. Deductions, as well as details about your tax refund or tax liability, are also mentioned. It is basically a summary of your earnings and receipts. Most of the citizens are turned off from doing (to become filer) because of three main reasons, firstly, the process is very cumbersome, and secondly, they don’t have a guide to do so, they want to hide their sources of income.
Be aware, if you do not file your returns; you will be liable to pay a penalty and in severe cases situation might lead up to prosecution under the provisions of the Income Tax Ordinance 2001. Filing your tax returns and wealth statement is beneficial for both you and the state government. Now assuming that you are agreed to become a filer. Here are steps that will attempt to get you on your way to become a filer without any hassle.
Steps to be followed
- Register yourself
- Logging into Iris Portal
- Enter Password for Iris login
- Completing an income tax return
- Submission of wealth statement
- Filing it as a salaried person
- Revising it:
- Revising the wealth statement:
- Filing it after deadline:
- Record keeping for an income tax return:
- Persons obligated to file it:
- Credits, Rebates and exemptions:
Step 1: Register yourself:
For filing your Income Tax Return, the first step is to register yourself with the Federal Board of Revenue (FBR). For Income Tax Registration, an individual can register online through IRIS Portal, whereas the principal officer of AOP (Association of Person) and Company need to visit their Regional Tax Office (RTO).
Step 2: Logging into the IRIS Portal
File it online by logging into the IRIS Portal. If you are a first-time filer, registration will be mandatory for filing your Return. After registering once, you can log into IRIS and file it. You will get your Registration Number to log into the portal by clicking on ‘E-Enrollment for Registered Person’.
Step 3: Enter Password to login to IRIS
You can log in to IRIS by entering your Registration Number and password, received through E-enrollment with the Federal Board of Revenue (FBR). You may also reset/change your password by clicking on ‘forget the password.’
Step 4: Completing it
To file your Income Tax Return online, you must complete the Return-of-Income form and Wealth Statement (statement of assets & liabilities) form. To facilitate the taxpayers, the Knowledge Base portal provides step by step written and video guides on filing it and Wealth Statement.
Step 5: Submission of wealth statement
Wealth Statement will only be successfully submitted if your current year’s wealth has increased/decreased from the previous year’s wealth by the same amount as your income has increased/decreased from your expenses. Failure to submit wealth statement will disallow you to submit your filing form.
Step 6: Filing income tax return as a salaried person:
In order to facilitate salaried persons in filing their Returns, a declaration form 114 (I) has been provided by Authorities. The salaried person would need to complete the Declaration form 114 (I) in order to successfully submit their Income Tax Return. Persons who are deriving income only from salary and other sources, where salary is more than 50% of Income can avail this form.
Step 7: Revising the income tax return:
An Income Tax Return can be revised within five (5) years of being originally filed to correct any omission or wrong statement. In order to revise the return filed, the individual has to file an application for revision in IRIS. After approval of your application, you can file a revised Return in IRIS portal.
Step 8: Revising the wealth statement:
A Wealth Statement (statement of assets and liabilities) can be revised in IRIS before receipt of the notice under sub-section (9) of section 122 of the Income Tax Ordinance 2001.
Step 9: Filing income tax return after deadline:
To file your Income Tax Return online after the deadline, you would still have to complete the filing as described above.
Step 10: Recordkeeping:
Persons having taxable earnings are bound to keep Income Tax Return records for a minimum of six (6) years.
Step 11: Persons obligated to file:
You might be obligated to file your Income Tax Return if you have earnings up to a certain threshold.
Step 12: Credits, Rebates and exemptions:
If you are an Active Taxpayer, you can avail Credits, Rebates and Exemptions only.
Data protection is ensured by FBR itself, “In case you file an income tax return, your personal information not be disclosed to anyone except the officials.”
Hopefully, the above-mentioned steps will help people at large to file their taxes easily. Countries that prosper have a high tax to GDP ratio normally a notch above 32% whereas in Pakistan the tax to GDP ratio is just approximately 10%. In order for the country to prosper filing taxes is imperative and it should be promoted as a culture and national duty.