Filing vs Paying Taxes Explained: See Valuable Taxation Tips

Filing vs Paying Taxes is an important topic that all taxpayers must know about. Here is some important piece of information elaborating payment and filing of taxes.
The state employs various forms of tax regimes to generate income from the public. The theme of charging tax to the people is correlated with the concept that the public is generating revenue by using different state resources. The government possesses the authority to levy taxes on the public. The revenue thus generated is used to run the affairs of the state and other capital and development expenditures along with meeting payment obligations.
Difference between Filing and Paying Taxes
Direct and Indirect Taxes
Typically, taxes fall into two categories: direct taxes and indirect taxes. Direct taxes are charged on the income or profits of the taxpayers and are directly paid to tax collection authorities like tax paid by an employee on his salary earned.


While, indirect taxes are those that are charged when people buy goods and services in a state like buying soap, oil, and other grocery items. Every taxable goods and service contains the applicable amount of tax in its retail price that is collected by the withholding agent and deposited to the state’s treasury.
When talking about the tax system in general, many people ask the question what is the difference between filing taxes and paying taxes? The answer is pretty simple. Paying taxes means providing the state with the money it needs to run its affairs through paying income taxes or by paying indirect taxes. While filing taxes or a tax return means submitting a report to the state stating the annual income and related tax liability. In the majority of nations, both businesses and individuals must submit their annual tax returns and fulfill their tax obligations.
The forms (which can be electronic) used to file income tax are called tax returns. In the broader sense, paying taxes is an ongoing process throughout the tax year, while a tax filing is an annual event normally once upon completion of the tax period stating the income and paying any tax owed.
Filing Tax Returns
If a person is paying direct taxes, then he must file his return stating his income for the year and the tax paid against the income thereon. Additionally, the state wants to know about your financial position, so the person is also required to submit his wealth statement. Any changes in the wealth statement must be tallied with the changes in his income for the said tax year.
Citizen’s Obligation for Filing Tax Returns
An individual who is domiciled in Pakistan whether resident or not, must have to file his tax returns for the tax year even if he is living abroad.
So every person who is a citizen of Pakistan must file his return for every tax year, just paying the taxes is not enough to discharge his obligation as taxpayer. A person who properly files his tax return is called a filer while the rest of the people are called Non-Filers. The filer then appears as the active taxpayer in the FBR Active Tax Payer (ATL) list.
The salaried individuals can calculate their income tax using our absolutely free online tax calculator.
FAQs – Filing vs Paying Taxes
Conclusion
The role of taxation in vital for generating government revenue. The terms paying taxes and filing tax returns are the two distinguished phenomena. Every taxpayer must have the understanding of Filing Vs Paying Taxes. While paying taxes is actually an ongoing process contributing to state funds, while filing tax returns is an annual obligation for individuals and businesses, ensuring transparency in financial reporting of their income and wealth. The act of filing not only a compulsory legal requirements but also designates individuals, firms and companies as either filers or non-filers, but also a prime responsibility of citizens to fulfill their tax obligations in a timely manner.