Tax Filing Services: Grasp Tax Basics and Access the Most Affordable Offers

If you are looking for experts who can better look after your taxation matters, you are at the right site. Error-free and accurate filing of tax returns is equally important for individuals and businesses. Filing your tax return is the primary obligation of every citizen. Once it is filed accurately, you don’t need to worry about the tax penalties and surcharges.

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Income Tax Basics

Around 37 agencies including FBR (Federal Board of Revenue), PRA (Punjab Revenue Authority), SRB (Sind Revenue Board), BRA (Baluchistan Revenue Authority), KPRA (Khyber Pakhtunkhwa Revenue Authority) are charging around 70 types of taxes in Pakistan. With the variety of taxes collected by government institutions and the broadening tax base over time, one must be aware of the following basics of the taxation regime.

Tax Filing Obligation of Pakistani Citizens

Filing of Income Tax Returns is the primary responsibility of every citizen in Pakistan
The individual is said to be a Pakistani Person whether Resident or Non-Resident having Pakistani CNIC or Pakistani Citizen or National. Pakistani citizens living abroad also have to file their returns in Pakistani even if they are tax residents of some other country.
Filing Tax Returns will make a person as Active Tax Filer on FBR’s ATL

Before anyone indulges in taxation matters, he must be aware of the basics of income tax in Pakistan:

Resident

An individual is said to be a RESIDENT if:

he is present in Pakistan for 180 days in a tax year, for a period or aggregate period
he is present in Pakistan for 120 days in a tax year, for a period or aggregate period, and in the 4 years preceding the tax year has been in Pakistan for 365 days or more for a period or aggregate period
he is an employee or official of the Provincial or Federal Government posted abroad in the tax year

An Association of Persons is resident if management and control of its affairs is partially or wholly located in Pakistan for any time of the said tax year

A Company is a resident if

it is formed or incorporated under any Pakistani law
if the management and control of its affairs is partially or wholly located in Pakistan for any time of the said tax year
if it is a local or provincial government in Pakistan

Non-Resident

Any individual, association of persons, or company is said to be non-resident for the tax year if they don’t fall in the above definition of Resident or are not Resident.

Person

In the tax regime, a Person is defined as follows:

He is an individual
An Association of Persons or a Company formed, incorporated, or organized in Pakistan or elsewhere
The Federal Government, a foreign government or its political subdivision, or a public international organization.

Company

A company is defined as follows:

A company as per definition of Companies Ordinance, 1984 (XLVII of 1984)
A corporate body formed under any law in force in Pakistan;
A modaraba company
A body incorporated by the law of a country outside Pakistan relating to the incorporation of Companies;
As per amendment through the Finance Act, 2013 to enlarge the scope of the definition of a Company. Now a company includes the following as per Income Tax Ordinance, 2001:
- A finance society, a cooperative society, or any other society
- A non-profit organization (NPO)
- A trust, an entity, or a body of persons constituted e or established by or under any law for the time being in force.
A foreign association, whether incorporated or not, which by the general or special order of the Board, is declared to be a company for the purposes of this Ordinance
A Provincial Government in Pakistan
A Local Government
A Small Company

Association of Persons

Shortly said AOP or a firm (a business relationship between persons who have mutually agreed to share the profits of a business carried on by any active person or all of them), anybody of persons formed under a foreign law but not a company, an undivided Hindu family or an artificial juridical person

Tax Year

Is defined as 12 months ending on the 30th of June of a year. It’s a financial year and is represented by the calendar year where the end date falls, which means the financial year starting July 11, 2022 and ending on June 30, 2023 will be noted as FY 2023 or Calendar Year 2023. It’s commonly the Normal Tax Year

Special Tax Year

A tax year comprises any 12-month period, which is denoted by the calendar year having the most relevance to the Normal Tax Year relative to the ending date of the special tax year i.e. For a 12-month tax year from January 1, 2023 to December 31, 2023 shall be denoted by the calendar year 2024.

Taxable Income

It’s the total Income excluding any donations qualifying straight for deductions and certain deductible allowances.

It’s the total Income excluding any donations and certain deductible allowances. The donations that are qualified straight for deductions

Total Income

It’s the cumulative Income chargeable to Tax for each income source or a given head of Income.

Head of Income

The incomes are segregated into the 5 following heads as per the Income Tax Ordinance, 2001

Income from Salary
Property Income
Business Income
Capital Gains on Assets
Other Sources of Income

Income From Sources In Pakistan

The most common sources of income in Pakistan as per section 101 of the Income Tax Ordinance include:

Salary earned, whenever paid, whether received or receivable for an employment in Pakistan
Salary paid by the Local, Provincial, or Federal Government in Pakistan for an employment service
Payment of Dividend by Resident Company
Payment of Profit on debt by a Resident Person
Rental Income or Property Income by leasing an immovable property in Pakistan
Pension payment or annuity payment or earned and to be paid by a Resident or Non-Resident’s permanent establishment.

Foreign Source Income

Any income which is earned abroad not from any source of income in Pakistan

FAQs

Income Tax Return filing is the process of submitting a document or an electronic form to the government stating the annual income of a person, the deductions, and the chargeable amount of tax and tax payment details.

Every person or citizen of Pakistan whether resident or non-resident has the prime obligation to file his annual tax returns. The person who files his annual tax return is treated as active tax filer in FBR records.

A person who discharges his obligation by filing his annual income tax returns at FBR IRIS Income portal is considered a Tax Filer or Active Tax Payer. Upon verification, FBR states the said person’s Filing Status as Active.

Filer Vs Non Filer

Filer

Lower Tax Rates
Good finacial outlook
No Risk of any legal action

Non Filer

Higher Tax Rates
Suspicious Financial Outlook
Threat of legal action

Conclusion

Effective tax filing is crucial to businesses and individuals, beingfiler offers you the online tax filing services of filing your tax returns accurately, with meticulous compliance with tax laws. Understanding Pakistan’s taxation system basics, including taxpayers definitions, residency criteria, tax year definitions, and various income sources, is essential for understanding tax obligations. As tax regulations evolve, a clear grasp of these fundamentals becomes increasingly important for in in-depth understanding of the complex norms of taxation.

Grasp our cheapest and the most affordable tax filing services offers to become tax complied responsible citizen today.

Tax Filing Services: Grasp Tax Basics and Access the Most Affordable Offers

Befiler with befingfiler.com – The best online Tax Filing Services

Income Tax Basics