Most people hear the terms “non-filer” and “filer” when it comes to the tax system in Pakistan, but many are unaware of their meaning and difference. In today’s article, we will learn in detail who is a non-filer, how to become a filer, and what are the disadvantages of being a non-filer.
Definition of non-filer
A non-filer is an individual, company or institution that does not file its annual income tax return with the FBR. Every year, the FBR releases the “Active Taxpayer List” (ATL), which includes only those individuals who have filed their tax returns on time.
If someone’s name is not included in the ATL, they are considered a “non-filer” and are subject to various additional taxes and financial penalties.
What is ATL?
Active Taxpayer List (ATL) is a list issued by the FBR which includes all those individuals and entities who have filed their tax returns within the stipulated time.
This list is updated in March every year and is available on the FBR website.
Disadvantages of Being a Non-Filer
Being a non-filer creates several financial and legal obstacles, the most notable of which are:
1. Higher tax on bank transactions:
A 0.6% withholding tax is levied on bank check cashing, cash withdrawals or transfers from non-filers, which is lower or non-existent for filers.
2. Additional tax on vehicles and property:
The tax rate on purchasing a vehicle or land for a non-filer is double or even higher. For example, if the tax on a vehicle is 50,000 for a filer, it can be up to 100,000 for a non-filer.
3. Deduction on prize bond or lottery:
Withholding tax of up to 25% is levied on prize money from non-filers while it is 15% for filers.
4. Deduction on prize bond or lottery:
Withholding tax of up to 25% is levied on prize money from non-filers while it is 15% for filers.
5. Barriers to business opportunities:
Many government tenders or contracts require a filer, otherwise the application may be rejected.
6. Mobile Phone Registration and Other Facilities:
PTA approval for non-filers may result in delay in mobile registration or higher fees.
How to become a filer
If you are a non-filer and want to become a filer, you need to go through the following steps:
1. Get NTN:
- Visit the FBR website and sign up on the IRIS portal.
- Enter your CNIC number, mobile number and email.
- Once registration is complete, you will receive a National Tax Number (NTN).
2. File Income Tax Return:
- Log in to the IRIS portal and enter your annual income, expenses, assets and bank account details.
- Complete all the information and submit the return.
3. Joining ATL:
When you file your return on time, your name will be included in the upcoming ATL, and you will become a filer.
Key Points:
- Filer
- Non-Filer
- Lower Tax Rate
- Higher Tax Rate
- Business Opportunities
- Legal Obstacles
- Lower Withholding Tax
- Higher Withholding Tax
- Easy Loans and Financing
- Constraints
FAQs
Question: Is it mandatory for every Pakistani to become a filer?
Answer: If your income is taxable or your business, property or bank transactions are large, then you are legally required to become a filer.
Question: How long does it take for a non-filer to become a filer?
Answer: The online registration and tax return filing process is usually completed in 1 to 2 days, if all information is correct.
Conclusion
Being a non-filer is not just a term but its practical disadvantages affect your daily financial life. Therefore, it is important for every responsible citizen to file income tax returns on time and become a filer. Becoming a filer not only brings legal benefits but also plays a positive role in the country’s economic system.
