ISLAMABAD: The Federal Board of Revenue (FBR) announced on Saturday that it will not extend the September 30 deadline for the submission of tax returns. This decision comes as part of the government’s rigorous efforts to expand the tax net and boost revenue generation in response to Pakistan’s multi-faceted economic challenges.
“Historically, a facility used to be given [to the masses] by extending the overall deadline. However, this time the decision has been made that the date [for submission of tax returns] will not be extended and September 30 will be the last date to file tax returns,” FBR spokesperson Bakhtiar Muhammad stated.
He emphasized that this move aims to enforce legal requirements strictly, reflecting the incumbent administration’s strategy to enhance tax compliance and avoid shortfalls in tax collection.
Despite the firm deadline, the FBR acknowledges that some taxpayers may find it difficult to submit their returns on time. The spokesperson clarified that individuals can seek extensions from their respective tax commissioners if they have valid reasons. However, these extensions will be granted on a case-by-case basis, and the overall deadline of September 30 will remain unchanged for the entire country.
In June, the government, led by Prime Minister Shehbaz Sharif, passed a tax-heavy budget with an ambitious taxation plan. This was a strategic move to improve the chances of securing a fresh bailout deal with the International Monetary Fund (IMF), which has since been approved pending the Fund’s executive board’s formal endorsement. The stringent adherence to the tax return deadline is part of this broader strategy to meet the IMF’s conditions and enhance revenue collection.
Recent reports indicate a looming tax shortfall for the first quarter of the fiscal year. The FBR faces a significant challenge, with an estimated shortfall of over Rs220 billion against the agreed target of Rs2,652 billion for July-September. This shortfall includes a deficit of Rs98 billion in August alone, where the FBR collected Rs1,456 billion against a target of Rs1,554 billion. Consequently, the FBR needs to gather Rs1,196 billion in September to meet the quarterly target.
In response to the potential shortfall, the FBR has proposed several stringent measures to enhance tax collection. These measures include freezing bank accounts and banning the purchase of property and vehicles for tax evaders. The FBR’s internal assessment identified two million nil filers among the six million total return filers. To address this, the FBR suggests categorizing non-filers into three categories and imposing fines of up to Rs1 million for incorrect or incomplete tax returns.
Non-filers, particularly those with nil returns, will face severe actions, including the freezing of bank accounts and a ban on purchasing properties or vehicles. Additionally, those evading payment of tax amounts ranging from Rs0.5 million to Rs1 million may face disconnection of their electricity and gas connections. Previously, the FBR had ordered the disconnection of mobile phones for 0.5 million non-filers, but this measure did not achieve the desired results.
To further tighten compliance, the FBR has decided to outsource audits of high-net-worth individuals (HNWs) and companies. This move aims to ensure thorough and unbiased audits, thereby improving tax collection from these segments.
The FBR’s decision to stick to the September 30 deadline for tax return submissions underscores the government’s commitment to improving tax compliance and revenue generation. While individual extensions are possible, the overall strict deadline reflects the urgent need to address economic challenges and meet international financial obligations. With rigorous measures in place to tackle tax evasion, the FBR aims to close the revenue gap and strengthen Pakistan’s economic stability.
