FBR to declare incomplete income tax returns as 'invalid': penalty may be imposed

The Federal Board of Revenue (FBR) has decided to declare income tax returns for Tax Year 2014 as 'invalid' on which National Tax Number (NTN) or computerised national identity card numbers (CNICs) are missing or incorrect and penalty would also be imposed in case of 'invalid' returns.
In this regard, the FBR has issued new Income Tax Return/Wealth Statement Forms for Individual/AOPs for Tax Year 2014, directing the taxpayers to file separate Reconciliation Statement in case Wealth Statement is filed for the first time.
Under the new return form, five kinds of errors/omissions shall render a Return invalid & make the taxpayer a non-filer & liable to penalty under section 182(1) of the Income Tax Ordinance, 2001. The invalid return forms include those on which NTN or CNIC is missing, incorrect or invalid; return on which mandatory fields marked by '*' are empty; return which is not signed by the taxpayer or representative (as defined in section 172 of the Income Tax Ordinance, 2001) of the taxpayer; return that is not filed on the prescribed Form and return which is not filed in the prescribed mode.
According to the instructions for filling in Return Form and Wealth Statement issued by the FBR, the individuals deriving income under the head Salary have to file one page IT-1A Form with Annex-F & Wealth Statement if required to be filed.
The individuals deriving income under the head Salary, Property, Capital Gains & Other Sources (excluding Business) & Income subject to fixed / final tax have to file one page Return in IT-1B Form with Annex-A, Annex-F & Wealth Statement if required to be filed.
The FBR said that individuals deriving income under the head business or falling under Final Tax Regime (FTR) such as Commercial Importers, Exporters, Contractors, etc have to file two-page Return in IT-2 Form with Annex-A, Annex-B, Annex-F & Wealth Statement if required to be filed. Annex-C, Annex-D & Annex-E are required only where Depreciation / Amortisation, Admissible/ Individuals, including members of AOPs or directors of Companies, whose last declared or assessed income or declared income for the current tax year is equal to or more than Rs 1,000,000 or the final tax paid is equal to or more than Rs 35,000, must file Wealth.
The AOPs deriving income under the head business or falling under Final Tax Regime (FTR) such as Commercial Importers, Exporters, Contractors, etc have to submit IT-2 Form with Annex-A & Annex-B. Remaining Annexes (C, D, E) are required only where Depreciation / Amortization, Admissible / Inadmissible Deductions & Minimum Tax Chargeable / Option out of Presumptive through the following modes: AOPs deriving income under any head other than business have to file one page IT-1C Form with Annex-A.
Electronically at FBR Portal (https://e.fbr.gov.pk ) which is mandatory for all AOPs, Sales Tax Registered Persons, Refund Claimants & Salaried Persons having annual income of Rs 500,000 or more. However, all others are also encouraged to file the returns electronically; manually on paper at Taxpayer Facilitation Counter of the respective Regional Tax Office. Paper Return Form can be downloaded from FBR Website http://www.fbr.gov.pk.
Taxpayers may seek guidance through the following modes: By calling Helpline 0800 00 227, 051 111-227-227; by visiting the nearest Taxpayer Facilitation Centre (TFC), list of which can be downloaded from FBR website at http://www.fbr.gov.pk
The tax can be paid in any authorised branch of NBP & SBP at any time before filing of return. List of authorised braches of NBP & SBP can be downloaded from http://www.fbr.gov.pk.
The FBR said the arrears of salary are to be included in amount declared in Col 'A' and again included in amount declared in Col 'B'.
Flying / Submarine Allowance is to be included in amount declared in Col 'A' and again included in amount declared in Col 'B'. Transport Monetization for Civil Servants to be included in amount declared in Col 'A' and again included in amount declared in Col 'B'. Employment Termination Benefits to be included in amount declared in Col 'A' and again included in amount declared in Col 'B'.
The FBR said that only Foreign Income (Not Loss) should be declared. Only Agriculture Income (Not Loss) should be declared.
Tax Credits include Tax Credits for the following:- Share in Taxed Income from AOP and charitable Donations u/s 61.
The investment in Shares of Public Companies listed on a Stock Exchange in Pakistan (only for Original Allottee other than a Company) u/s 62; contribution to Approved Pension Fund (only for Pakistani Individual registered with FBR / NADRA deriving income from Salary / Business) u/s 63; property u/s 64.
The FBR said taxpayers wanting to opt out of Presumptive Tax Regime (PTR) u/c (41A), (41AA) or (41AAA), Part IV, Second Schedule, must file Annex-E.
The FBR said only Personal / Household (Non-Business) expenses should be declared.
Expenses borne by more than one person must be declared in total by each person. For example, if in one family more than one member are contributing to expenses or if more than one family are living jointly & within each family more than one member are contributing to expenses, total expenses under each head must be declared by each member of each family, FBR said.
If rows provided in any segment are inadequate, additional rows may be inserted.
All assets must be declared at cost, including ancillary expenses. If an asset is acquired under a Hire Purchase Agreement, total price should be declared as asset under the appropriate head & balance payable amount should be declared as liability.
If Wealth Statement is filed for the first time, separate Reconciliation Statement must be filed for each previous year.
The FBR said the equipment, Plant, Machinery (Non-Business) must be declared with description, for example, Generator, Tubewell, Harvestor, Tractor, Trolley, etc.
The FBR added that assets created in the name of spouse(s), children & other dependants should be declared only if acquired by them with funds provided by you (Benami Assets), according to the new return form.