Nearly one-third of Pakistan's tax filers, around 1.7 million individuals, have declared zero taxable income, The News reported on Tuesday citing sources.
This flood of "nil" returns, from a total of 5.5 million submissions, presents a critical challenge to the Federal Board of Revenue (FBR).
Ironically, the FBR has identified nearly one million return filers who have declared less income in their returns for the current fiscal year compared to the last.
This has raised alarm within the organisation, which is now preparing major plans to conduct audits to detect tax evasion. "We have found 977,000 filed returns where the declared income was shown as less than in the last fiscal year".
"Certain exporters are showing losses in their returns. The FBR has decided to dispatch tax notices to them after the deadline of October 31, requesting them to revise their returns or the law will take its course," top official sources confirmed while talking to the publication.
So far, the FBR has received around 5.5 million returns, out of which more than 1.7 million declared nil or null income.
"We have obtained very crucial information even through such returns, and it will now be used to expand the narrow tax base and turn this information into tax revenue," the sources said.
Official sources stated that the FBR has already sent three messages to return filers, including one reminding taxpayers to file returns. After the October 31 deadline, the FBR will dispatch a nudging message to all those showing less income than in the previous fiscal year. The FBR has hired 2,000 auditors and will conduct an effective audit for the current fiscal year.
When contacted on Monday, FBR Chairman Rashid Mahmood Langrial said that the FBR sent messages to 853,000 return filers, informing them that the tax authority possessed data of their transactions and other details, and that they must file their income tax returns keeping this information in mind.
The FBR also included an assumption-based income assessment in its message, advising filers to proceed cautiously as the FBR would scrutinise returns and take action against potential tax dodgers.
"The FBR possesses a lot of data and information and will proceed against those who choose to hide their income," the FBR Chairman said, adding that the organisation would send two notices before performing an ex parte assessment against those who do not respond.
One tax official said that they were not concerned about "no income" filings, as they have evidence of them making significant financial transactions, and the law will proceed against them.
The sources said the FBR extended the deadline for filing tax returns to October 31, mainly because the tax authority was expecting three million more returns.