ISLAMABAD: The registered companies with the Securities and Exchange Commission of Pakistan (SECP) increased to 158,577, but the total of 58,779 companies filed their income tax returns for the tax year 2020 against 57,725 companies filed in the tax year 2019, reflecting an increase of 1,054 companies.

According to the latest data compiled by the Federal Board of Revenue (FBR), the number of corporate filers increased from 57,725 in the tax year 2019 to 58,779 during the tax year 2020.

In 2019, a total of 51,000 companies filed their income tax returns.

The total number of registered companies with the SECP stood at 158,577.

The FBR’s past analysis revealed the mismatch between the number of returns and payments with returns by the companies.

Against 61 percent increase in the number of returns by the corporate sector during the tax year 2017 to the tax year 2020, the payment with returns has increased by only 13 percent.

The share of companies in payments with 13 return has gone down from 68.3 percent in the tax year 2017 to 42.1 percent in the tax year 2020, despite the fact that the 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, the 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 withholding tax liability, this insignificant increase calls for scrutiny as it is even below the year-on-year inflation statistics.

The FBR had already received a staggering number of 2.6 million returns and collected Rs48.6 billion tax with returns as against 1.8 million returns and 29.6 billion tax paid with returns on 8th December 2020, the closing date, last year.

This signifies 45 percent growth in the filing of the tax returns, while 64 percent growth in the tax paid with returns.

Therefore, it is quite reassuring to witness that the FBR is already zeroing in on 3.0 million total returns received and 54.7 billion tax collected with returns against the entire TY-2020, as on 30th June 2021.

Copyright Business Recorder, 2022