What are the Filer Benefits in Pakistan?

Being a filer the tax will be reduced by more than 50% and if you are an expatriate/non-resident, you will receive the benefits of a filer. Similarly, on vehicle purchase, the tax for a non-filer is almost double that paid by a filer.

> Saving in Withholding Tax

You will save in WHT taxes on your bank transactions (cash withdrawals and money transfers etc.) as compared to those who are non-filers.

What is Withholding Tax?

Withholding taxis an amount that employers withhold from an employee’s paycheck and remit to local and federal taxing authorities on behalf of the employee.

On cash withdrawal (Over Rs. 50,000): Filer – 0.3%, Non-filer – 0.6%. Rs. 300 per lac for filers and Rs. 600 per lac for non-filers. No taxes for filers on bank transactions (Cross cheque, pay the order, demand draft etc.). If you have a running business, less withholding taxes will be deducted on your invoices as compared to non-filers business persons.

If you have a business and you are a Filer then less withholding taxes will be deducted on your invoices as compared to non-filer business. When any business person makes a payment, the following difference in taxes applies to filer and non-filers both:

• Tax On supplies by distributors
• On sale of Company goods
• On sale of other than company goods (that are not company belongings)
• Payments to Media for ads
• On Company transport services
• On transport services outside company (Other than company)
• Execution of any other Company contract
• Execution of any other outside company contract
• On selling petroleum products to a petrol pumps

> Low Tax on Withdrawals

Even common tasks which do not relate to any company or organization are now charged taxes and non-filers are especially asked to pay tax even when there’s no similar tax on filers. These taxes are much high for non-filers and you often end up paying a large amounts for everyday tasks, services and products.

• On Online money transfer over 25,000
• Get profit on National Savings Scheme (by Government / private) or Savings
• Profit on debt paid by banking companies
• Get Profit on bonds , certificates, debentures, securities etc

> Vehicle Purchase

You will save much on registration of vehicles and transfer of vehicles. Withholding Tax on registration of vehicle is around 15,000 to 2,50,000 for filers while 25,000 to 4,00,000 for non-filers. You will also save on vehicle token tax being a filer as compared to non-filers. Token tax for filers is between Rs 800 and Rs 10,000. While token tax for non-filers is doubled between Rs 1200 and Rs 30,000.

• Annual tax for transporters and transport service providers:
  • Goods transport capacity:
    • Filer Rs. 2.5/kg; Non-filer: Rs. 4/kg
  • Vehicle with weight capacity of over 8,120 KG: Rs. 1,200
• Passenger transport service providers:
• Capacity between 4 to 9 passengers:
  • Filer – Rs. 50 per seat, Non-filer Rs. 100 per seat
• Capacity between 10 to 19 passengers:
  • Filer – Rs. 100 per seat, Non-filer Rs. 200 per seat
• Capacity of 20 passengers or more:
• Filer – Rs. 300 per seat, Non-filer Rs. 500 per seat

> Low Token Tax

You will save on vehicle token tax as mentioned above filers can pay less token amount that the non-filers. Token tax for filers is between Rs 800 and Rs 10,000, while for non-filers is between Rs 1200 and Rs 30,000.

> Low Vehicles Income Tax

Most activities related to vehicles registration, selling, buying or transferring all include withholding tax based on a person’s status as a filer or a non-filer, where the later are taxed higher. And again filers will save on vehicle token tax amount as compared to non-filers.

> Save on Purchase of Property

• You will save your money when buying/ selling or transfer of Property.
• On property transfer tax ratio for:
  • Filer – 1%, Non-filer – 2%
• On purchase of property (over Rs. 40,00,000) value tax ratio for:
  • Filer – 2%, Non-filer – 4%

> Government Tenders

The non-filer pay 10% percent tax on auctioning of goods belongs to government and other companies whereas non-filers pay 15% percent on the auction of goods of government or other companies. On amount of a contracts, the non-filers pay 15% percent tax where as 7.5% percent tax paid by the filers and again filers pay 15% percent tax on prize money of prize bonds whereas non-filers pay 25% percent tax on the same amount.

Preferences in Govt. tenders and saving in taxes. 7.5 percent tax for filers and 15 percent tax for non-filers.

On auctions tax ratio for both will be: filers – 10 %, for Non-filers – 15 %

> Benefits on Bank Transfers

Non-filers pay 15% tax on profit of banks and saving scheme whereas the 10% tax paid by filers, the filers pay 4.5% duty on supply of goods to government and private companies as compared to filers, non-filers pay 9% tax. Filers pay no tax on bank transactions (cross cheque, pay order, and draft) while non-filers has to pay Rs 600 as tax on each bank transaction. On contracts amount, the non-filers pay 15% tax on the other hand filers just pay 7.5% tax and again filers pay 15% percent tax on prize money of prize bonds whereas non-filers pay 25% percent tax on the same amount. Similarly, filers pay 12% tax on commission amount whereas non tax payers or non-filers pays 15% tax on the same. When all these taxes are implemented

• On cash withdrawal over Rs. 50,000
• On Payment Order, Demand Draft or similar instrument amount over 25,000
• On Online money transfer over 25,000
• More tax on sale of demand draft, pay order etc.
• All bank transactions

> Lesser Taxes on Imports and Exports

On imports of raw material, 5.5% tax for filers while 8% tax for non-filers is implemented. It’s mean on an import of Pakistani rupees 20,00,000, a filer will pay Rs. 110,000 on the other hand a non-filer will have to pay Rs. 160,000 as tax. The importers would have to pay 8% tax around Rs 160,000 on the import of Rs two million of raw materials whereas the tax filers pay only 5.5% Rs 110,000 on the same amount and quantity of the raw material that is bought by the non-filers. A non-filer exporters would have to pay 9% duty an amount of Rs180,000 on export of goods worth Rs 2 million on commercial exports.  For imports of commercial material tax for filers is 6% and 9% for non-filers.

However, the filers pay only 6% duty, Rs 120,000 on export of goods worth Rs 2 million on their commercial exports.

Likewise, non-filers will have to pay 20% tax on their dividends company’s profit against the 15% tax paid by active taxpayers.

> Salaried Persons Tax Filing Benefits

Most of the salaried persons don’t know about the benefits of becoming an active taxpayer or a filer, so they are not filing income tax returns due to lack of knowledge. However, they are already paying income tax deducted from their salaries. Salaried persons tax is deducted at source by their respective employers. But they still considered as a non-filer, if they don’t file income tax returns or their name is not appears in the ATL list, it makes them non-filers even tax is being deducted from their salaries by their employers and they end up paying excessive or huge amount of taxes in the end.

Salaried persons can enjoy many benefits just by becoming a filer as they are already paying their taxes. It is mandatory for all salaried persons to fill their income tax returns and become a filer, whether they are government or private employees. The big loss associated with non-filing the tax returns is that you have lost your claim of refund, as the taxes deducted on purchase.