Saturday, January 28, 2023

Tax return drops 12% in 2021

It has been revealed in official that the Federal Board of Revenue (FBR) has recorded a fall of 12 percent in the number of yearly return filed for the tax year 2021.

In accordance with provisional statistics, the number of people who filed returns for the tax year 2021 decreased to 3.04 million, down from 3.45 million in the previous tax year.

However, the payment with the return increased by around 33% to Rs70 billion during the tax year 2021, compared to Rs52.74 billion during the tax year 2020, according to the data.

Fiscal returns filed by individuals, including corporate and salaried individuals, totaled 2.89 million in the tax year 2021, accounting for more than 95 percent of the total number of returns filed in the tax year under consideration.

Individuals filed 3.31 million returns during the tax year 2020, a 12.56 percent decrease from the 3.31 million returns filed during the previous year’s period under consideration.

The lack of withholding tax provisions, which were announced in the Federal Budget 2021/22, may be responsible for the decrease in the number of returns filed by people. Certain withholding requirements necessitated the filing of a necessary return in order to qualify for a reduced rate of withholding income tax in order to qualify.

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In 2001, the Income Tax Ordinance repealed the withholding restrictions that had been in place for many years, and people became less concerned about filing their annual income tax reports.

The government declared in the Budget 2021/22 that it will eliminate around 12 withholding clauses out of a total of 38. The Federal Bureau of Revenue stated in an official note that “a large number of provisions increases complexity and places an excessive strain on different withholding agents in terms of compliance.” The ease of doing business index has an impact on the country’s ranking as well.”

Withholding tax on cash withdrawals; withholding tax on banking instruments; banking transactions other than those conducted in cash; the collection of tax from persons remitting amounts abroad through credit, debit, or prepaid cards; the collection of tax on domestic and international air travel were among the major withholding provisions that were repealed from the statute.

According to the data, the Association of Persons (AOPs) have submitted 79,260 tax returns for the tax year 2021, compared with 75,665 tax returns for the previous tax year, representing a 4.75 percent increase.

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