The Federal Board of Revenue (FBR) electronic system is not permitting new filers of income tax returns to generate Payment Slip (PSID) and pay tax merely on the basis of computerised national identity card numbers (CNICs).
Tax experts told Business Recorder that the existing taxpayers are resisting non-filer rates to become Active Taxpayer despite filing their returns manually, as FBR is picking only electronically filed returns for the purposes of ATL.
The higher rates of withholding taxes are being paid by the manual filers of income tax returns where names are not available in the Active Taxpayer List issued by the FBR.
When contacted tax lawyer Waheed Shahzad Butt told this scribe that FBR's IT system is unable to cater the new persons without NTN, who are willing to file their income tax returns for the Tax Year 2015 and pay their income tax liability as the IT system is not generating any tax PSID. New taxpayers cannot generate PSID for payment of income tax solely on the basis of CNICs. On the issue of CNIC and NTN an investigation has already been initiated by the Federal Tax Ombudsman (FTO).
The issue has been witnessed in case of new taxpayers like individuals. Quite surprisingly if someone is a new taxpayer and willing to pay taxes, he/she cannot generate PSID and pay tax through FBR web portal merely on the basis of CNIC.
Tax lawyer further added that after issuance of S.R.O 791(I)/2015 all individuals earning taxable salary shall be liable to file income tax return electronically, while IT system discourages new persons who are willing to file their tax returns and pay their income tax as the system is unable to create PSID on the basis of CNIC only, meaning thereby at backend NTN is a must.
Earlier, Lahore High Court issued restraining order against collection of enhanced rates of Income tax by treating the petitioner's status as Non-Filer (Inactive) on the 'ATL' issued by FBR.
In the petition before High Court the Petitioner questioned the working of FBR to flout the provision of Income Tax Ordinance, 2001 governing Active Taxpayer status under Section 2(23A) of the Ordinance, which is without lawful jurisdiction.
ATL has become more important after the amendments made in the Ordinance through the Finance Act, 2015 under which the gap of withholding tax rates had been widened for income tax return filers and non-filers. Primary condition for becoming a Filer in terms of Ordinance deals with income tax matters is that the taxpayer's name should appear in the "ATL".
Section 2(23A) deals with this issue which reads as "Filer" means a taxpayer whose name appears in the active taxpayers' list issued by the Board from time to time or is holder of a taxpayer's card. This means that only the taxpayers' whose name appears in ATL would be considered as 'filers' and all other taxpayers shall be treated as Non-Filer. In the light of provisions of Section 114 & 118 of the Ordinance read with Rule 73 of Income Tax Rules, 2002, there are many cases where the taxpayers have filed their income tax returns for tax year 2014 manually, as they were not legally required to submit the income tax return online/electronically.
However, even then their names are not appearing in the ATL: Lawyer added.
Despite filing complete tax return for the tax year 2014, name of the Petitioner has not been included in the ATL.
The matter was duly communicated to the concerned Chief-CIR.
Thereafter matter was forwarded by the Chief-CIR to the DBA and Incharge Lab for filing report then matter has been referred to the Member (IT). On silence, a specific written request was forwarded to the Member (IT) at email address [email protected].
Petitioner has been treated as "Non-Filer" and higher rates of income tax deduction have been applied, which is not justified.
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