ISLAMABAD: The government has exten­ded the deadline for filing income tax returns for the tax year 2024 until October 31, providing an opportunity for those who did not file their returns before October 14.

The previous deadline was Oct­ober 14, but banks in Islam­abad and Rawalpindi were closed for three days, causing issues for taxpayers who completed their retu­rns, Federal Board of Rev­enue Chairman Rashid Mahmood Lan­g­rial confirmed to Dawn on Monday.

According to the income tax ordinance, the original deadline for submitting tax returns was September 30.

As of October 14, the FBR received 4.537 million income tax returns, compared to 2.183m during the same period last year, showing an increase of 107.83 per cent. For the tax year 2023, the FBR received a total of 6.464m returns. To reach last year’s level, it anticipates an additional 1.927m returns.

Preliminary data shows that from July 1, 2023 to October 14, 2024, the FBR received 1.059m new return filers who enrolled in the tax system, with 463,029 new filers added between July 1, 2023 and October 14, 2024.

Nil-filers

While the total number of retu­rns has significantly increased compared to last year, the proportion of nil-filers has also risen shar­ply in tax year 2024. Nil-returns are often submitted for one-time financial transactions or to benefit from lower tax rates for placement on the Active Taxpayers List (ATL).

FBR reports increase in tax returns, but nil-filers on the rise

From July 1, 2024 to October 14, 2024, there were 1.679m nil-filers, accounting for 37pc of all returns submitted during this period. In tax year 2023, there were 783,816 nil-filers, representing 35.86pc of total returns filed (2.183m).

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In total, the 2023 tax year saw 6.464m ret­urns filed, of which 3.508m were nil-returns, comprising 54.26pc of the total. Further analysis shows that from July 1, 2023 to October 14, 2024, the number of new return filers was 1.059m, with 636,961 classified as nil-filers. The trend continued in tax year 2024, with 463,029 new returns filed since July 1, 2024, of which 315,650 were nil-returns.

To address this trend, the government has decided to eliminate both the non-filer and notional-filer categories (nil-filers). Noti­onal filers submit returns solely to qualify for re­­duced tax rates, despite not paying any taxes, making it challenging for the government to identify individuals evading tax payments.

Tax payments

Tax payments associated with returns for tax year 2024 reached Rs119.077 billion by October 14, compared to Rs52.202bn in the same period last year, showing a 128pc increase. This substantial payment helped the FBR meet its revenue collection target for September 2024.

Under the FBR transformation plan, it is proposed that non-filers be prohibited from engaging in any financial or investment activities, with travel restrictions except for Haj and Ziarat trips. The proposed measures include three tiers based on income declared. Non-filers cannot purchase cars, immovable property, or financial instruments, nor can they open bank accounts, except for Asaan Account.

Published in Dawn, October 15th, 2024