THE Federal Board of Revenue (FBR) has asked all the federal ministries/divisions/departments to ensure filing of income tax returns by all salaried employees or face prosecution. It has also asked the higher judiciary including its officers and honourable judges to file their tax returns. The warning comes in the backdrop of reports that about fifty per cent of the public sector employees have not become filer despite having taxable income. FBR is making strenuous efforts to increase the tax net and as a result of its campaign the number of tax returns increased. Figures of December 2019 showed the FBR received more than 1.7 million income tax returns (till December 6) for Tax Year 2019 as compared to 1.2 million returns during the same period of the Tax Year 2018, reflecting an increase of 0.5 million. However, there are reasons to believe that the focus on government employees was unrealistic as it has little to do with actual increase in tax collection. This is because due tax is deducted from the salaries of all government employees every month and even if there is some difference in deduction and total tax liability of an employee, it is deducted in May/June i.e. before close of the financial year. If some government employees do not file returns it is because of lethargy or careless attitude and doesn’t mean that they are tax evaders. The focus on filing of returns by public sector employees has more to do with tax return figures than the revenue collection. In fact, there should be no need for filing of tax returns by government employees as was the case for some years during Shaukat Aziz era. Every employee should be issued an electronic tax deduction certificate with a copy to FBR, which can be treated as tax return (in case there is no other source of income).
