ISLAMABAD: The number of individual income tax filers has grown substantially by 57 percent during Tax Year 2020, followed by corporate tax returns (40.3 percent) and Association of Persons (AoPs) 26.7 percent.

According to the FBR’s analysis on the income tax returns for Tax Year 2020 issued Wednesday, the comparison of Tax Year 2020 with tax year 2017 also indicates healthy growth trends. The number of returns which was 1.994 million in the Tax Year 2017 has reached 3.102 million in Tax Year 2020. In absolute terms 1.1 million returns have been added as compared to Tax Year 2017. Further analysis revealed that the individual income tax filers has grown substantially during this period (by 57 percent), followed by corporate tax returns (40.3percent) and AoPs (26.7percent).

The FBR’s report said that as far as growth in payment with returns is concerned, substantial improvement has been achieved during last two tax years. Tax paid with return by individuals has recorded the highest increase of around 75 percent, followed by AOPs 63.2 percent and companies by around 27 percent.

Ordinance promulgated: Non-filers of tax returns to face strict actions

From yet another angle, the behavior of these three categories of return filers show that the share of tax paid by individuals’ return filers recorded significant growth, increasing from 26.3 percent in TY17 to 49.3 percent in TY20. The share of AOPs in tax paid with returns incremented slightly from 5.5 percent to 8.6 percent. The share of companies in payments with 13 returns has gone down from 68.3 percent in TY17 to 42.1 percent in TY20, despite the fact that number of corporate returns has increased from 39,944 to 56,055 during this period.

While this can be attributed to the increased number of individual returns filed, nevertheless, parametric tax audit of corporate tax returns selected on the basis of robust risk-parameters in recommended to ascertain the veracity of corporate tax declarations. This recommendation is also based on the fact that in absolute terms, tax paid with corporate returns has increased very slightly from Rs20,339 million in the tax year 2017 to Rs22,045 million in the tax year 2020. Unless the corporate sector has been meticulously discharging its advance and WHT liability, this insignificant increase calls for scrutiny as it is even below the year-on-year inflation statistics, the FBR report added.

Copyright Business Recorder, 2021