What is a “Return of Income” The Return of Income is a Form filed by a person to the Income Tax Department. It contains details of the person‟s annual income(s).
Obligation to file income tax declarations
Who is required to submit a return of income?
- Every company irrespective of any conditions, whether earning exempt income, or still in start-up stage or any other situation;
- Associations of persons and individuals with annual income over Rs. 400,000/- for tax year 2020.
Any person who is charged to tax in any of the two preceding tax years
Any person who claims a loss to be carried forward and set-off against the income of the following year(s).
- Any person who owns immovable property:
- with land area of 250 sq. yards or more located in areas falling within the municipal limits, a Cantonment Board, or the Islamabad Capital Territory;
- with land area of 500 sq. yards or more located in rating area; or
iii. a flat located in areas falling within the municipal limits , a Cantonment Board, or the Islamabad Capital Territory; or
- a flat with covered area of 2,000 sq. feet or more located in rating areas;
- any person who owns a motor vehicle having engine capacity of 1,000 cc or more
- any person who has obtained a National Tax Number; or
- any person who is the holder of commercial or industrial connection of electricity where the amount of annual bill exceeds Rs. 1,000,000.
- Non profit organizations, irrespective of any conditions;
- Any welfare institution approved under Clause (58) of Part I of the Second Schedule to the Income Tax Ordinance, 2001, irrespective of any conditions.
- Every individual whose income under the head „Income from business‟ exceeds Rs. 300,000 but does not exceed the maximum amount that is not chargeable to tax.
- Any person [who in the opinion of the Commissioner was required to furnish the return of income (for any of the aforesaid reasons) but has failed to do so] to whom a notice for furnishing of the return of income has been served by the Commissioner.
- Even if none of the above applies, one may still need to file a return in order to claim a refund of tax deducted or collected at source (other than final tax).
Who is not required to file I.T Return?
- Exceptions (not required to file return of income) to the above are as under:
- Deriving income exclusively from salary upto Rs. 499,999 (The annual statement of deduction of income tax from salary, filed by the employer is treated as return of income on behalf of such employee);
- Entire income is subject to final tax or fixed tax for which a separate statement is prescribed;
- A widow, an orphan below the age of 25 years or a disabled person solely for the reason of owning immovable property (a flat or land of 250 sq. yards or more) located in areas falling within the municipal limits*, a Cantonment Board, or the Islamabad Capital Territory; and
- A non-resident for the reason of owning immovable property;
- “Maximum amount that is not chargeable to tax” for the tax year 2020 is Rs. 400,000 of taxable income derived from all sources taken together.
Who is required to furnish the statement of final/fixed tax?
- Any person deriving income subject to a separate charge, income subject to final tax or separate block of income [Please read our brochure Income subject to Separate Charge, Final Tax, and Fixed Tax Regimes of Income Tax].
- Any person [who in the opinion of the Commissioner was required to furnish the statement of final/fixed tax but has failed to do so] to whom a notice for furnishing of the statement of final/fixed.
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