Everything You Need to Know About The New 2022-2023 Income Tax Return

As the year ends, people are busy preparing their income tax returns. For Pakistan, the income tax return for the year 2022-2023 has been released. The new return includes changes from the previous year, so taxpayers need to be aware of them.

Introduction: what is an income tax return in Pakistan?

An income tax return is a form filed with the Federal Board of Revenue by an individual or corporate taxpayer in Pakistan. The return must include all income earned during the tax year and any taxes paid.

The return calculates the amount of tax owed and determines whether the taxpayer is entitled to a refund. The income tax system in Pakistan is set up so that most taxpayers are required to file a return, but it is not necessary for all. For example, an individual who is under the age of 18 will not be required to file a return. 

Income Tax Return in Simple words:

Income tax is money people must pay to the government based on their income. Pakistan has a progressive income tax system, meaning that people with higher incomes pay more taxes than those with lower incomes.

People must fill out a tax return form every year, which tells the government how much money they earned and how much taxes they owe.

Salary Income Tax Calculator & Slabs 2022-2023.

Who needs to file an income tax return in Pakistan?

Income tax is levied on the income of individuals, corporations, trusts, and partnerships. The Income Tax Ordinance, 2001, requires that every person whose total income exceeds the taxable limit for the relevant tax year must file an income tax return. The taxable limit for the tax year 2022-2023 is Rs. 400,000 for business individuals and Rs. 600,000 for salaried individuals.

A person required to file an income tax return must do so within the specified due date, September 30 of the relevant tax year. For example, for the tax year 2022, the due date for filing an income tax return is September 30, 2022. 

What is the deadline for filing an income tax return in Pakistan?

The deadline for filing an income tax return in Pakistan is September 30, 2022. This date is also the deadline for paying any taxes owed. Taxpayers who do not file their returns or pay their taxes by this date will be subject to interest and penalties.

Income Tax Rates and Slabs for Rental Income, 2022-2023.

Income tax returns must be filed electronically:

Every taxpayer is now obligated to submit their annual income tax return “electronically” due to the amendment made by the Finance Act 2015 and SRO 791(I)/2015. Taxpayers can file their returns through the e-filing portal on the website of the Federal Board of Revenue (FBR). The portal is open from July 01 to September 31.

How to file an income tax return in Pakistan

Filing an income tax return in Pakistan is a simple process that can be completed online or by paper. The first step is to calculate your taxable income. It includes all forms of income, such as salary, interest, capital gains, and business profits. Once you have your total taxable income, you must find the appropriate tax bracket. The Pakistani tax system has progressive tax rates, so the more income you earn, your tax rate will be higher.

After determining your taxable income and tax bracket, you can begin filing your return. There are two ways to file: online or by paper. Filing online is the easiest way to file your return and can be done through the Federal Board of Revenue (FBR) website. If you choose to file by paper, you must download and print the appropriate forms from the FBR website.

What documents are needed to file an income tax return?

In Pakistan, the main body that is responsible for collecting taxes is the Federal Board of Revenue (FBR). FBR has a system for filing income tax returns; certain documents are required to file a return.

The first document needed is a copy of the individual’s National Tax Number (NTN). The FBR assigns this number and serves as a way to identify the taxpayer. The NTN must be included on the tax return form.

The second document needed is a copy of the individual’s latest income tax return. This return must be filed with the FBR, including information such as the taxpayer’s income, deductions, and tax liability.

The third document needed is a copy of the individual’s bank statements.

List of the Documents to file an income Tax Return:

To keep you as “Income Tax Return Filer,” the following information (whichever is applicable) is required to prepare and file the return of total income and wealth statement:

1. Income:

♦ Salary: Salary certificate

♦ Business income Profit and Loss account (in case of AOP, %age of shareholding)

♦ Rental income detail and evidence

♦ income from other sources detail and evidence

♦ Capital gains detail and evidence

2. All Bank account statement(s) for the period from July 01, 2021, to June 30, 2022.

NOTE: (Please describe each debit/ credit entry in your bank statement by identifying it as income, loan, advance, sale proceeds of car/plot/encashment of investment, TDR certificates, and insurance premium payment. Likewise, explain all DEBIT entries as well)

3. Tax deduction certificates from mobile phone companies;

4. Certificate from bank showing profit paid, tax deducted on Bank profit/cash withdrawal, and Zakat deducted;

5. Details and documents related to fixed assets purchased and sold during the year, including property (plot/ house), investment, car, etc.;

6. Insurance premium paid during the year;

7. Foreign Remittance received during the year;

8. Gift received/made during the year, through banking channel

9. Purchase and Sale of Shares during Jul 2021 to Jun 2022 and closing balance as on

30/06/2022 along with a Withholding certificate from NCCPL;

10. Detail of Household expenses as given below:

S.No. Description Rupees

1 Rent

2 Rates / Taxes / Charge / Cess

3 Vehicle Running / Maintenance

4 Travelling

5 Electricity

6 Water

7 Gas

8 Telephone

9 Asset Insurance / Security

10 Medical

11 Educational

12 Club

13 Functions / Gatherings

14 Donations, Zakat, Annuity, Profit on Debt, Life Insurance Premium.

15 Other Personal / Household Expenses

16 Contributions in Expenses by Family Members

11. Detail of ownership and facilities in use:

a. Vehicles

i. Vehicle No.

iii. Owned/ In-use

iv. CNIC of the owner, if not owned by the taxpayer

b. Houses

i. Address (House, Street, Mohala, Sector, etc.)

ii. City

iii. Land Area (Marla / SQ Yard)

iv. Owned/ rented/ other

v. CNIC of the owner, if not owned by the taxpayer

12. Detail of tax paid as given below:

a. On import of goods

b. On withdrawal from the pension fund

c. From salary u/s 149

d. On dividend Income

e. On Government securities

f. On profit on debt

i. Certificate/Complete IBAN No. Etc.

ii. Bank name

iii. Share%

g. On payments received from non-residents (other than tax deduction treated as final

tax)

h. On payments for goods (other than tax deduction treated as final tax)

i. On payments for services (other than tax deduction treated as final tax)

j. On payments for the execution of contracts (other than tax deduction treated as final tax)

k. On cash withdrawal from the bank

i. Certificate/ Complete IBAN No. Etc.

ii. Bank name

iii. Branch address

iv. Share%

l. On sale/purchase of shares through a Member of Stock Exchange

m. On trading of shares through a Member of Stock Exchange

n. On financing of carrying over trade

o. On motor vehicle token tax (Other than goods transport vehicles)

i. Registration No.

iv. Owner’s Name

v. Share%

p. With the bill for electricity consumption

i. Consumer No.

ii. Consumer CNIC

iii. Consumer Name

iv. Share%

q. With telephone bills, mobile phone and pre-paid cards

i. Telephone Number

ii. Consumer CNIC

iii. Consumer Name

iv. Share%

r. With Motor Vehicle Registration Fee

i. Registration No.

ii. Owner’s Name

What are the consequences of not filing an income tax return?

If you don’t file an income tax return in Pakistan, the Federal Board of Revenue (FBR) can take legal action against you. It could include a fine, imprisonment, or both. The FBR can also notify your bank to freeze your accounts. Not filing your income tax return can also make it difficult to get a loan or open a bank account in the future.

Conclusion

In conclusion, Pakistan’s government expects to bring in more revenue from the tax return for the 2022-2023 fiscal years. They are hoping that by increasing the number of people who file their taxes, they will be able to improve the country’s financial situation. If you are a taxpayer in Pakistan, be sure to file your return on time and help contribute to the government’s goal.

In conclusion, Pakistan’s government expects to generate Rs. 3,500 billion from income tax in the fiscal year 2022-2023. This increased Rs. 500 billion from the previous fiscal year. The government has also announced several measures to increase tax compliance and reduce tax evasion. These measures include introducing a new online tax filing system, extending the tax filing deadline, and launching a media campaign to raise awareness about the importance of paying taxes.