Year-end tax moves to make before you File Tax Return

What to do at the end of the Tax Year : Tax Returns: What to do?

Every taxpayer should prepare and get ready for Year-end tax moves to make before you File Tax Return. The Federal levy, tax, on income (Income Tax) is governed by the Income Tax Ordinance, 2001 and Income Tax Rules, 2002.

This includes taxable income, income subject to separate charge and income subject to final tax of a person for a tax year, and also includes global income of the resident person, even if it has already been taxed outside of Pakistan.

For most of the taxpayers tax year ends in June and now you must be getting ready with all the information/ documents to go up ahead with your income tax return filing.

Since the last date of return filing for the tax year will be September end and December end. But preparing for the return and organizing tax file for smooth & error-free return filing / declaration is a pre-requisite.

Each year there is delay in filing of returns by the taxpayers and extensions are granted and new dates for filing too, I believe by following these guidelines you will a better and compliant taxpayer.

List of things to do, documents to gather/ prepare, details to be fetched, evidences to be collected depends on types of taxpayers and business sector that they are operating in.

Things to consider before fling of your income tax return: –

Heads of Income

Year-end tax moves to make before you File Tax Return

First you have to know heads of income and sources of income in order to ascertain what is required for your filing. Under the Income Tax Ordinance, 2001, all income are broadly divided into following five heads of income:

Salary Income
Income from Property
Income from Business
Capital Gains
Income from Other Sources

[like Dividend, Royalty, Profit on Debt, Rent from sub-lease of Land or Building, Income from Lease of any Building together with Plant Machinery, Prize on Bonds, Winnings from a Raffle, Lottery or Crossword puzzle, or Profit on Loan, Advance, Deposit or Gift (subject to certain conditions)].

Document Checklist for Income Tax Return Filing

Important documents that one must have while Filing Income Tax returns are as follows:
– Salary slips issued by the employer (in case of a salaried person)
– Tax deduction certificate from the employer (in case of a salaried person)
– Detail of Income earned from all sources
– Tax deduction evidence (all deductions)
– Detail of assets, liabilities, personal expenses and wealth reconciliation (Individual taxpayer)
– Financial Statements in case of Businesses (whether individual/ corporate)
– Additional documents depending on return’s complexity

Tax computation / working for each and every Income head is different to calculate tax payable/ refundable.

WHAT YOUR TAX FILE SHOULD CONTAIN

Evidence of income earned/ source of income
Salary slips/ copies of cheques
Evidence of income(s) earned on all head of income
Expenses incurred, assets purchased, liabilities undertaken
Tax computation for all income heads
Bank statements
Tax deduction certificate from the employer
Bank statement / deduction certificate for Tax deduction on cash withdrawal
Certificate for tax deduction on telephone/ internet usage, section 236
Any other tax deducted for a salaried person, this will add to advance tax paid/ deducted and any access tax paid is liable to be refunded
Cheques along with bank statement for rent received from property
Rent agreement(s) in case of property Income. Because rent agreements change almost each year and it is important to have updated agreement(s) in case of you need to re-visit them at later stages.

WEALTH STATEMENT UNDER SECTION 116

A wealth statement shall be furnished by the due date for furnishing the return of income for tax year or on the date required by notice (by the individuals).

A wealth statement should contain detail of Personal assets, liabilities and expenses.