Who needs to file income tax returns in Pakistan

Day 2: Who Needs to File Income Tax Returns in Pakistan?

In Pakistan, filing an income tax return is not just a financial formality—it’s a legal responsibility. But many people are unsure whether they fall under the mandatory filing criteria. On Day 2 of our tax course, we will clarify who must file a tax return according to the Income Tax Ordinance, 2001.

From salaried employees to overseas Pakistanis with local income, here’s everything you need to know.

What is an Income Tax Return?

An income tax return is a legal document submitted to the Federal Board of Revenue (FBR) to declare your annual income, expenses, deductions, and tax liability. It is submitted through the IRIS portal by September 30th of each year (for individuals).

Filing your tax return not only ensures compliance with law but also helps you:

Join the Active Taxpayers List (ATL)
Claim refunds or rebates
Avoid unnecessary withholding taxes
Maintain a clean financial record

Who Must File an Income Tax Return in Pakistan?

✅ 1. Salaried Individuals

You must file a return if:

Your annual salary exceeds Rs. 600,000
You have multiple sources of income, such as rental income or freelancing
You want to claim tax refunds or deductions
You want to be listed on the ATL for reduced tax rates

Note: Even if your employer deducts tax at source, you’re still responsible for filing your own tax return.

✅ 2. Business Owners and Self-Employed Individuals

Mandatory if:

You run a sole proprietorship, partnership, or small business
Your annual income exceeds Rs. 600,000 (even without formal registration)
You are earning as a freelancer, consultant, or professional
You are registered under Sales Tax or FBR POS

Business owners must also file:

Wealth Statement
Sales Tax Returns (if registered)

✅ 3. Non-Resident Pakistanis (NRPs)

NRPs must file returns if:

They have Pakistan-sourced income, such as rent, dividends, or business profits
They want to benefit from the ATL status
They own immovable property or maintain a business interest in Pakistan

Being a non-resident does not exempt you from tax on Pakistan-sourced income.

✅ 4. Property Owners

If you’ve:

Sold, purchased, or transferred property in the last tax year
Own property with a fair market value above Rs. 5 million
Received rental income exceeding Rs. 200,000 annually

—you are required to file a tax return and declare those assets.

✅ 5. Investors and Dividend Earners

If you earn income from:

Capital gains on shares or mutual funds
Dividends from listed or unlisted companies
Interest/profit on debt (e.g., bank accounts)

—you must file a return and may even be eligible for tax rebates or adjustments.

✅ 6. Anyone Issued an FBR Notice

Even if it is not mandatory for you to file based on income, receiving any notice from FBR—such as for non-filing, audit, or inquiry—means you must file a return to comply.

✅ 7. Voluntary Filers

Even if not legally required, many choose to file voluntarily for:

Visa or immigration applications
Loan approvals
Business credibility and government tenders
Tax refunds due to over-deduction

Benefits of Filing Your Tax Return

Lower withholding taxes on banking, property, and vehicle transactions
Access to ATL (Active Taxpayers List)
Eligibility for refunds and adjustments
Avoid penalties for non-filing or late filing
Stronger financial profile for official matters

✅ Summary

If your income exceeds the threshold, if you have local sources of income, or if you simply want to remain compliant and financially smart, filing a tax return is a must. This concludes our blog post, “Who needs to file income tax returns in Pakistan?” If you liked our content, please give it a thumbs up, and if you did not, please comment below.

Stay tuned for Day 3, where we’ll explain how to register for your NTN (National Tax Number) using the FBR IRIS portal.