If You Did Not File Tax Returns Last Year You Can’t Buy Cars Or Motorcycles

JUL 1, 2018 (BE2C2): From Monday onward, only people who file their taxes will be allowed to buy vehicles.

The Federal Board of Revenue (FBR) has prohibited people who do not file their taxes, or are non-filers, from purchasing cars and motorcycles. Their requests to get their vehicles registered will not be entertained either.

As part of this move, non-filers will also not be allowed to buy property worth more than Rs5 million.

Last year, there were only 1.3 million tax return filers and of them 500,000 paid zero taxes. In other words, only 800,000 Pakistanis paid taxes.

FBR officials say this step will increase the number of tax filers in Pakistan even if they don’t owe any tax to the government based on their returns — a practice being followed in most countries.

The new tax laws came int effect from Monday. Several analysts said the move will help develop tax filing culture and broaden the tax base eventually — a demand the multilateral lending institutions like the World Bank, IMF, Asian Development Bank, etc. have been constantly making.

“If you don’t pay taxes, Pakistan will not be sustainable,” Abbasi had said.

Ashfaq Tola, an economic analyst, lauded the decision taken by the revenue board. “This is a good step,” he said. “The facilities provided to citizens of Pakistan are not provided anywhere else.”

In December, former Prime Minister Shahid Khaqan Abbasi had directed the FBR to broaden the tax base thorough conversion of 80 million holders of Computerized National Identity Cards (CNIC) into National Tax Number (NTN) and trace out transactions of potential 8 to 10 million non-filers with use of technology in order to bring them into the tax net.

FBR officials say there are 80 million CNICs holders in the country, and after applying criteria of exclusion for people below 25 years and above age of 80 years, residing in rural areas, earning income from agriculture or even other mechanism, there should be 8 to 10 million people who should have been brought into tax net or can be brought into the tax system.

But first, FBR will have to place fair taxation system that does not allow choking of growth of businesses’ legitimate profits and Small Business Enterprises (SMEs), said one finance expert.

Why file your tax returns

Filing tax returns may seem like a long, difficult and unnecessary process but the pros outweigh the cons.

By filing your tax returns you are entitled to

Lower taxes on bank transactions
Lower taxes when buying property or cars
Tax refunds

How to do it

The process to file your returns is pretty easy and can be done online.

The FBR has an online income return system called IRIS, which can be accessed at www.iris.fbr.gov.pk. You register for it with your 13-digit identity card number or using your seven digit national tax number.

There is a section called ‘Return of Income’ through which users can click on the ‘Declaration’ tab and scroll through the options. For people whose tax is deducted at source, meaning your income tax is already cut before you get your salary, all you have to do is declare it under the ‘Adjustable Tax Regime’ section with the relevant code.

The FBR website also has a FAQ section to guide you through filing your returns.

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