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ISLAMABAD: Federal Board of Revenue (FBR) has said that as per amended law the annual income tax returns furnished after due date will not be treated as filer of return or will not make place on the Active Taxpayers List (ATL).

The FBR said that this amendment to income tax laws will be applicable on returns filed for tax year 2018.

The filers mean appearance of taxpayer’s name on ATL, which is mandatory to avail reduced rate of withholding tax rates and other benefits available to return filers. According to explanation to changes made through Finance Act, 2018, the FBR said that in order to create deterrence against late filing of returns a new section 182A to Income Tax Ordinance, 2001 has been inserted through the Finance Act, 2018 whereby a person who fails to file return of income under section 114 of the Ordinance within the due date as explained under section 118 of the Income Tax Ordinance, 2001 or within the date extended by the board or the concerned Commissioner under sections 214A and 119 of the Ordinance respectively shall not be included in the active taxpayers list for the year for which return was not filed within the due date.

“Therefore, a person who is unable to file return within the date stipulated under section 118 of the Ordinance or within the date extended by the Board or the concerned Commissioner under sections 214A and 119 of the Ordinance shall no longer be entitled to appear on the active taxpayers list for the year for which return of income is not filed within the due date i.e. a late filer shall no longer be treated as a “filer” in terms of section 2(23A) of the Ordinance as the name of such taxpayer shall no longer appear on the active taxpayers list issued by the board,” it said.

However, an explanation has also been inserted in section 182A of the Ordinance whereby it has been clarified that Section 182A of the Ordinance shall have prospective effect and shall only be applicable for the returns due for the Tax Year 2018 and onwards for which the first Active Taxpayers List is to be issued on March 01, 2019 under the Income Tax Rules, 2002.

Therefore, taxpayers should ensure that their income tax returns for the Tax Years 2018 and onwards are filed within the due date under section 118 of the Ordinance or the date extended under sections 214A and 119 of the Ordinance in order to avoid higher rates of withholding taxes across a multitude of transactions applicable to non-filers viz-a-viz filers.

Furthermore in terms of the newly inserted section 182A of the Ordinance, a person who fails to file return of income within the date specified under section 118 of the Ordinance or within the date extended under sections 214A and 119 of the Ordinance shall, in addition to exclusion from ATL for the relevant tax year as explained above shall not be entitled to carry forward any loss under Part VIII of Chapter III of the Ordinance to the tax year for which return of income is filed late.

The losses which cannot be carried forward to the tax year for which return of income is filed late, can however be carried forward to next year following the tax year in which return is filed late if the return for that year is filed within the due date. However, the condition specified in sub-section (2) of section 57 shall apply that no loss shall be carried forward to more than six tax years immediately succeeding the tax year for which the loss was first computed.