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06 February 2018

Amid its failure in increasing the narrow tax base, the government has now begun surveys of commercial and high-rise residential buildings across the country to scout people who have bought properties in plazas but do not feature in the tax net. This will be the first comprehensive on-ground exercise in almost 17 years after the unsuccessful door-to-door survey the military had tried to carry out during General Pervez Musharraf’s era. Broadening of Tax Base Director General Tanveer Akhtar Malik, an official of the Federal Board of Revenue (FBR), apprised the Senate Standing Committee on Finance about the initial outcome of the mapping of plazas. The real estate sector is attracting major investment and the FBR has initiated mapping of plazas that have been constructed during the past 10 years, said Malik. He said that Prime Minister Shahid Khaqan Abbasi wanted a meaningful tax broadening campaign be carried out targeting high-value unregistered taxpayers. After completing the mapping exercise, the FBR would start a survey in residential housing societies, said the director general. The FBR’s latest move comes as the tax authorities fail to retain even existing taxpayers. Against roughly 1.4 million active taxpayers as per tax year 2016, about 1.22 million people have so far filed income tax returns for tax year 2017, said Dr Mohammad Iqbal, Member Inland Revenue Policy of the FBR during the meeting. His statement suggests that instead of expanding the base, the FBR has let about 180,000 people off the hook. The last date for filing income tax returns was December 15, 2017. But Iqbal hoped that till the time the government publishes the Active Taxpayers’ List for 2017, the number would grow.
Less than 0.4% of the total population in Pakistan files income tax returns. The tax base would not expand unless the FBR reassures people that they would not be harassed after coming in the tax net, said National Bank of Pakistan President Saeed Ahmad, while responding to a question on whether the NBP employees were filing income tax returns. Under the law, it is mandatory for every person earning more than Rs400,000 per annum to file their returns. Ahmad, who is also a former deputy governor of the central bank, said that the process of filing income tax returns needs to be eased, as the current tax return form was very complex that even he finds difficult to complete without someone’s help. The FBR’s Member Facilitation and Taxpayers Education said that more than 60% corporate employees do not file their income tax returns, although the tax is deducted from their salaries. Malik said that mapping of malls would give the desired results and so far the Commissioner Broadening of Tax Base has sent notices to 33,000 people. He said that in Islamabad mapping of 450 plazas has been completed so far. Under the exercise, the FBR is collecting information about the buyers from the owners of these plazas, said the director general. Only in Islamabad Heights, about 97 people bought apartments and 40 of them were non-registered persons, said Malik. He said that the FBR would now send tax returns filing notices to these 40 people. He said that according to data collected from, there were over 550 plazas in Islamabad, each valued at more than Rs500 million. Similarly, there were around 70 malls in Islamabad that have a net worth in the range of Rs1 billion to Rs2 billion, according to the director general. Malik said that the FBR’s field formations were too occupied with their revenue collection targets, therefore, could not focus on broadening of the base. He highlighted an inherent contradiction in the FBR’s policy. He said that if the tax base broadens, the FBR’s revenue collection would dip due to high rates of withholding taxes being charged from non-filers of the income tax returns.