Who has to file a Tax Return

Who has to file a Tax Return is a tricky question in order to assess whether or not you should file income tax return for a tax year.

Following is a list of people that are required to submit a return of income for a tax year under Income Tax Ordinance 2001. You can look into similarities on what you do and whether these provisions applicable to you.

This blog clearly stated on who should file income tax return.

• A registered company
• An individual (other than a company) who has a taxable income for the year exceeding the maximum amount that is not chargeable to tax under this Ordinance for the year (Under PKR 400,000 as per Income Tax Ordinance 2001).
• A non-profit organization as mentioned in clause (36) of section 2.
• A welfare institution approved under clause (58) of Part I of the Second Schedule.
• Every individual subjected to tax in respect of any of the two preceding years.
• Every individual claiming a loss to make progress with the Ordinance for a tax year.
• An individual who claims an immovable property with a specific area (two hundred and fifty square yards or more) or any flat situated in regions that fall inside as far as possible existing instantly before the commencement of Local Government laws in the provinces; or zones in a Cantonment; or the Islamabad Capital Territory.
• Every individual who possesses immovable property with a land area of five hundred square yards or more situated in a rating area.
• Every individual who possesses a flat of area two thousand square feet or more situated in a rating region.
• Every individual who claims to own a motor vehicle having engine capacity above 1000 CC.
• Every individual who possesses a National Tax Number.
• Every individual who is the holder of commercial or industrial connection of electricity where the amount of annual bill exceeds the prescribed limit (rupees five hundred thousand or more)
• Every individual registered at any chamber of commerce and industry or any trade or business association or any market including Pakistan Engineering Council, Pakistan, Medical and Dental Council, Pakistan Bar Council or any Provincial Bar Council, Institute of Chartered Accountants of Pakistan or Institute of Cost and Management Accountants of Pakistan.
• Every individual who has a business income that exceeds rupees three hundred thousand (PKR 300,000) but does not exceed rupees four hundred thousand (PKR 400,000) in a tax year

The relevant section 114 of the Income Tax Ordinance, 2001 reads as under: –

Return of Income: Section 114 of the Income Tax Ordinance, 2001

114. Return of income. — (1) Subject to this Ordinance, the following persons are required to furnish a return of income for a tax year, namely:–
(a) every company;
(ab) every person (other than a company) whose taxable income for the year exceeds the maximum amount that is not chargeable to tax under this Ordinance for the year; or
(ac) any non-profit organization as defined in clause (36) of section 2;
(ad) any welfare institution approved under clause (58) of Part I of the Second Schedule;
(b) any person not covered by clause 8(a), (ab), (ac) or (ad) who,—

(i) has been charged to tax in respect of any of the two preceding tax years;
(ii) claims a loss carried forward under this Ordinance for a tax year;
(iii) owns immovable property with a land area of two hundred and fifty square yards or more or owns any flat located in areas falling within the municipal limits existing immediately before the commencement of Local Government laws in the provinces; or areas in a Cantonment; or the Islamabad Capital Territory;
(iv) owns immoveable property with a land area of five hundred square yards or more located in a rating area;
(v) owns a flat having covered area of two thousand square feet or more located in a rating area;
(vi) owns a motor vehicle having engine capacity above 1000 CC; 5
(vii) has obtained National Tax Number; or

(viii) is the holder of commercial or industrial connection of electricity where the amount of annual bill exceeds rupees five hundred thousand;
(ix) is a resident person registered with any chamber of commerce and industry or any trade or business association or any market committee or any professional body including Pakistan Engineering Council, Pakistan Medical and Dental Council, Pakistan Bar Council or any Provincial Bar Council, Institute of Chartered Accountants of Pakistan or Institute of Cost and Management Accountants of Pakistan; or
(x) every resident person being an individual required to file foreign income and assets statement under section 116A
(1A) Every individual whose income under the head ‘Income from business’ exceeds rupees three hundred thousand but does not exceed rupees four hundred thousand in a tax year is also required to furnish return of income from the tax year.
(2) A return of income –
(a) shall be in the prescribed form and shall be accompanied by such annexures, statements or documents as may be prescribed;
(b) shall fully state all the relevant particulars or information as specified in the form of return, including a declaration of the records kept by the taxpayer;
(c) shall be signed by the person, being an individual, or the person’s representative where section 172 applies;
(d) shall be accompanied with evidence of payment of due tax as per return of income;
(e) shall be accompanied with a wealth statement as required under section 116; and

(f) shall be accompanied with a foreign income and assets statement as required under section 116A.
(2A) A return of income filed electronically on the web or any magnetic media or any other computer readable media as may be specified by the Board shall also be deemed to be a return for the purpose of sub-section (1); and the Board may, by notification in the official Gazette, make rules for determining eligibility of the data of such returns and e-intermediaries who will digitise the data of such returns and transmit the same electronically to the Income Tax Department under their digital signatures and other matters relating to electronic filing of returns, statements or documents, etc.
(3) The Commissioner may, by notice in writing, require a person, or a person’s representative, as the case may be, to furnish a return of income by the date specified in the notice for a period of less than twelve months, where –
(a) the person has died;
(b) the person has become bankrupt or gone into liquidation;
(c) the person is about to leave Pakistan permanently;
(e) the Commissioner otherwise considers it appropriate to require such a return to be furnished.
(4) Subject to sub-section (5), the Commissioner may, by notice in writing, require any person who, in the Commissioner’s opinion, is required to file a return of income under this section for a tax year or assessment year but who has failed to do so to furnish a return of income for that year within thirty days from the date of service of such notice or such longer or shorter period as may be specified in such notice or as the Commissioner may allow.

(5) A notice under sub-section (4) may be issued in respect of one or more of the last five completed tax years or assessment years:
“Provided that in case of a person who has not filed return for any of the last five completed tax years, notice under sub-section (4) may be issued in respect of one or more of the last ten completed tax years.”
(6) Subject to sub-section (6A), any person who, having furnished a return, discovers any omission or wrong statement therein, may file revised return subject to the following conditions, namely: —
(a) it is accompanied by the revised accounts or revised audited accounts, as the case may be;
(b) the reasons for revision of return, in writing, duly signed, by the taxpayers are filed with the return;
(ba) it is accompanied by approval of the Commissioner in writing for revision of return; and
(c) taxable income declared is not less than and loss declared is not more than income or loss, as the case may be, determined by an order issued under sections 121, 122, 122A, 129, 132, 133 or 221:-

Provided that if any of the above conditions is not fulfilled, the return furnished shall be treated as an invalid return as if it had not been furnished:

Provided further that the condition specified in clause (ba) shall not apply if revised return is filed within sixty days of filing of return:

Provided also that where the Commissioner has not made an order of approval in writing, for revision of return, before the expiration of sixty days from the date when the revision of return was sought, the approval required under clause (ba) shall be deemed to have been granted by the Commissioner, and condition specified in clause (ba) shall not apply:

“Provided also that condition specified in clause (ba) shall not apply and the approval required thereunder shall be deemed to have been granted by the Commissioner, if-
(a) the Commissioner has not made an order of approval in writing, for revision of return, before the expiration of sixty days from the date when the revision of return was sought; or
(b) taxable income declared is more than or the loss declared is less than the income or loss, as the case may be, determined under section 120.”
(6A) If a taxpayer files a revised return voluntarily along with deposit of the amount of tax short paid or amount of tax sought to be evaded along with the default surcharge, whenever it comes to his notice, before receipt of notice under sections 177 or sub-section(9) of 122, no penalty shall be recovered from him:

Provided that in case the taxpayer deposits the amount of tax as pointed out by the Commissioner during the audit or before the issuance of notice under sub-section (9) of section 122, he shall deposit the amount of tax sought to be evaded, the default surcharge and twenty-five per cent of the penalties leviable under the Ordinance along with the revised return:

Provided further that in case the taxpayer revises the return after the issuance of a show cause notice under sub-section (9) of section 122, he shall deposit the amount of tax sought to be evaded, default surcharge and fifty per cent of the leviable penalties under the Ordinance along with the revised return and thereafter, the show cause notice shall stand abated.

(7) Every return purporting to be made or signed by, or on behalf of a person shall be treated as having been duly made by the person or with the person’s authority until the person proves the contrary.

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