Such as, filing of the income tax return is quite difficult for those who are not so techy nor having a basic understanding of the taxation. Despite all the worries, the income tax as simple as the user considers, the user just needs to learn about the “Iris” which is the web-based software of the (Federal Board of Revenue) FBR to file the income tax return in Pakistan. The user needs to generate the user I’d password / National Tax Number (NTN) and the collected information which is required to file the income tax return and the wealth statement. In this article, we will learn how to file the income tax return and wealth statement in Pakistan. But before all that we need to know about the exempted persons or bodies from the filing of the income tax return and who are bound to file the income tax return.
Persons not Required to Furnish the Income Tax Return:
- A widow;
- An orphan below the age of twenty-five years;
- A disable person;
The following persons are required to furnish the income return:
Every Government has the resources to generate the revenue in the fiscal year to drive the system, and one of them is taxation which provides the mechanism by the government for the collection of funds. Likewise, the government imposes some taxes on the persons who have a reasonable source of income during the financial year. Whereas, the financial year means the period which starts from 1st July and ends on 30th June of the year. Who is liable to file the income tax return as follows;
- Every Company.
- Every person whose taxable income for the year exceeds the maximum amount that is not chargeable to tax under the law.
- Federal or Provincial employees.
- Private servant.
- Any business individual.
(earning Rs. 300,000/- to Rs. 400,000/- per financial year)
- Any person who owns the assets in Pakistan.
- Every non-profit organization.
- Every approved welfare institution.
There are two forms one is under section 114 – income tax return, and the other is under section 116 – wealth statement. Some of the time both the forms open in one window and some of the time opens separately – Declaration – Normal Return (Ind/AOP/COP), whereas, in both conditions, the forms may be filled up with the same information.
How to file the wealth statement:
There are three pages of the wealth statement as follow;
- Personal expenses – the personal expense may be entered in the segregated form or the accumulated form in the “Other Personal / Household Expenses”.
- Personal Assets / Liabilities – enter the complete details of the property, vehicles, bank accounts details, savings, assets on the dependent’s person’s name, and liabilities i.e. loans, etc.
- Reconciliations of Net Assets – Unreconciled Amount tab must be “Zero“, the cash inflow and cash outflow must be equal if there is any difference the system will not allow to submit the form. If the difference may not be covered up in the calculation the remaining amount enters into the “other” tab.
Note: Wealth statement should be the same as the salaried person and the business individual.
Note: Business Capital should be declared in the wealth statement with the business name.
How to file the income tax return of the salaried person:
Go to the “Employment” tab, and in the salary tab – Pay, Wages, or Other Remuneration (including Arrears of Salary) – enter the amount in this tab.
The go-to the “Tax Chargeable / Payments” tab – the “Adjustable Tax”;
There are four categories under section 149 of the income tax ordinance;
Salary of Federal Government Employee u/s 149.
Salary of Provincial Government Employee u/s 149.
Salary of Corporate Sector Employee u/s 149.
Directorship Fee u/s 149(3).
How to file the income tax return of the business individual:
Three main heads are necessarily needed to fil up, and disclose the adjustable tax details which are important for the taxpayer to adjust his/her tax, which already had been paid/deducted from different heads.
- Put the expense details of the business in “Business” “Manufacturing / Trading Items” – put the business expense details which belongs to this category;
- “Management, Administrative, Selling & Financial Expenses” – put the business expense details which belongs to this category;
- “Business Assets / Equity / Liabilities” – put the business assets and liabilities details in this tab.
Put the adjustable tax details in the “Adjustable Tax” – any tax deducted at sources, mobile, electricity, bank, property, or vehicle, etc.
Note: put information on one page then “Calculate” from the same page and then go to the next page, repeat the same process on all the pages one by one. Then go the “Computation” tab and the tax payable must be “Zero” and “submit” the file after the “Verification – through the pin code”.
This article provided the complete guideline that how to file the income tax return and wealth statement in Pakistan for the beginners.
Slab Rates for the Tax year 2020-2021:
It is always agitated for the taxpayer to know the tax rates, these tax rates also known as slab rates;
Slab Rates for the Salaried Person;
“Up to 600,000 0%
600,001-1,200,000 5% of the amount above 600,000
1,200,001-1,800,000 30,000+10% of the amount above 1,200,000
1,800,001-2,500,000 90,000+15% of the amount above 1,800,000
2,500,001-3,500,000 195,000+17.5% of the amount above 2,500,000
3,500,001-5,000,000 370,000+20% of the amount above 3,500,000
5,000,001-8,000,000 670,000+22.5% of the amount above 5,000,000
8,000,001-12,000,000 1,345,000+25% of the amount above 8,000,000
12,000,000-30,000,000 2,345,000+27.5% of the amount above 12,000,000
30,000,001-50,000,000 7,295,000+30% of the amount above 30,000,000
50,000,000-75,000,000 13,295,000+32.5% of the amount above 50,000,000
Above 75,000,000 21,420,000+35% of the amount above 75,000,000
Slab rates of tax for individual (non-salaried) and AOP’s:
400,001-600,000 5% of the amount above 400,000
600,001-1,200,000 10,000 + 10% of the amount above 600,000
1,200,001-2,400,000 70,000 + 15% of the amount above 1,200,000
2,400,001-3,000,000 250,000 + 20% of the amount above 2,400,000
3,000,001-4,000,000 370,000 + 25% of the amount above 3,000,000
4,000,001-6,000,000 620,000 + 30% of the amount above 4,000,000
Above 6,000,000 1,220,000+35% of the amount above 6,000,000
Slab Rates for the companies:
2019 and onwards 29%”