Every year, the Government of Pakistan issues a financial bill which includes taxation details and shows tax rates of every income group, including businessmen, freelancers, and salaried individuals. Recently, top authorities in Pakistan have been putting pressure on people who are not yet filers, referring to them as non-filers.

Filer and Non-Filer:

It is a common practice all over the world for individuals and organizations to file their income taxes regularly. In Pakistan, these entities file themselves with the Federal Board of Revenue (FBR), Notifying the tax authorities of their income, liabilities and assets.

On the other hand, non-filers are those entities that are not registered with the FBR and do not file their income tax statements. These are usually people, who might purposefully or unintentionally skip paying taxes.

Process of Becoming a Filer:

People who generate more income than the government’s minimum tax limits are required to file annual sales tax reports. Who falls into this category? Businessmen, freelancers, salaried employees. For registration, people have to visit a nearby tax office physically or check the online FBR Portal and fill out a form to get a national tax number (NTN). For this, one needs a computerized national identity card (CNIC), bank statement, proof of residence and employee certificate (for employees only).

Role of Filers on the GDP Growth:

Pakistan, like every other country, depends on the taxes for smooth functioning of the economy. According to the Pakistan Economic Survey, the tax-to- GDP ratio is 8.9% for the Fiscal Year 2024, up from 8.5% the previous year, 2023.

The government uses tax revenue to run national developmental projects and ensure Educational reforms for the country’s future. At the same time, filers enjoy lower tax rates on various transactions, including property and vehicle transactions. Similarly, filers have lower taxes on bank profits and zero taxes on transactions.

They also have lower taxes on prize bonds. Furthermore, regular tax payments can improve credit rating, which ultimately helps in applying for loans.

Disadvantages for Non Filers:

The government of Pakistan has taken serious notice of people who are non-filers or have yet to pay their taxes. Non-tax payers face consequences such as limits on buying properties and vehicles, as they can not purchase above a certain limit. They pay more tax on bank transactions and profits. Similarly, FBR has issued notice of blocking their mobile SIMs, which will remain disabled until restored by FBR. Recently, the government has been planning to impose a travel ban on non-filers. However, these restrictions do not apply to students, NICOP holders, and infants.

It is highly debatable that taxpayers have the right to know how their money is being used. This means the government needs to provide transparency in public spending, ensure checks and balances to build trust and ensure that taxes are spent on services like health care, education and infrastructure in Pakistan. At the same time, people are concerned with the category of non-tax payers who enjoy all the benefits of society like taxpayers but do not comply with government’s regulations.