The most common question that arises in people’s minds after they think of becoming a filer is ‘Why?’ They tend to question the benefits of becoming a filer, or filing their tax return. Of course, when they are paying thousands and millions of rupees in tax every year, they ought to have some benefits too, especially in their day to day life. The people should not feel that their tax money is going to waste or that they made a mistake in becoming a filer.
Thus, we will take you through some of the top benefits of becoming a filer in Pakistan. Yes, there are certainly quite a few of them and you might want to avail them if you have long term plans in association with Pakistan, or even if you intend to work or move abroad.
1. Withholding Tax Adjustment
Filer status allows individuals to offset their WHT payments against their income tax liability. This means filers can claim WHT paid on vehicle or property transactions, reducing their overall income tax burden, a benefit not available to non-filers. Thus, a reduced tax burden is certainly something the citizens can avail. Who wouldn’t want to pay less tax or have a more reasonable tax deduction?
2. A Filer Purchasing Assets
Withholding tax (WHT) rates in Pakistan vary based on filer status, imposing nearly double rates for non-filers, especially noticeable when purchasing a car or immovable property. If one intends to purchase a car or a house on loan or directly, the taxation amount on a non-filer is quite heavy. They can become buried under simply the burden of tax if they do not file theirs and intend to purchase assets anyway.
3. Advance Tax For A Filer
Various advance taxes impact filers and non-filers differently. For instance, non-filers may face additional advance tax on electricity bills exceeding Rs. 25,000 and during the buying or selling of immovable property. These are the kinds of taxes that can be adjusted against the tax on salary of an individual if they have filed their return.
4. Tax Credits And Other Allowances
Filers enjoy several avenues for tax reduction, including credits and allowances. Some examples include tax credits for investments in,
- Voluntary Pension Schemes (VPS)
- Charitable donations
- Allowances for educational expenses if annual taxable salary is up to Rs. 1.5 million.
Thus, one can see that there certainly are benefits to becoming a filer in Pakistan. If you are looking for additional information on any of these benefits, you can always contact the FBR website, the Befiler website or have a tax lawyer explain to you how it all works.
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