Seven Common Mistakes to Avoid when Filing Income Tax Returns

1- CHECK YOUR FBR MALOOMAT PORTAL BEFORE FILING INCOME TAX RETURN

According to the law, any income or asset not disclosed in your income tax return is subject to being taxed. FBR retrieves income, asset, and expense information of individuals from different reporting entities every day. All the information that FBR receives is used to compare with the income tax return you filed. In case there is incomplete information, FBR will take legal action and send you a notice to remedy the situation.

DECLARE ALL INCOMES INCLUDING INCOME FROM INVESTMENTS

According to the law, every person who declares their income must include details of all incomes in their income tax return, which can include but is not limited to:

-Business income

-Rental income

FILE COMPLETE WEALTH STATEMENT

According to the law, a person must not only declare their income but also provide a wealth statement that details all assets acquired during the fiscal year. This includes any assets acquired in their name or under Benami names of family members, such as bank accounts, saving certificates, prize bonds, vehicles (owned or leased), share capital in businesses, and any other assets obtained during the year.

DECLARE THE ACTUAL EXPENSES

All taxpayers must calculate their expenses for the year, including but not limited to: rent, car maintenance, travel, education, and household expenses.

NOT SUBMITTING INCOME TAX RETURNS ON TIME

If you don't file your income tax return on time, you'll usually get an income tax notice from the government. Anyone who files their income tax return after the due date is required to pay a minimum penalty of PKR 20,000/- for salaried individuals, and 5% of the tax payable on business income for business people. However, the minimum penalty payable by a business person can't be less than PKR 20,000/-.

WRONGFULLY CLAIMING TAX CREDITS AND TAX DEDUCTIONS

Several tax credits and deductions are available to certain people under the law. However, in some cases, taxpayers incorrectly claim tax credits and deductions. It is advisable to seek legal advice from a tax expert to determine if you are eligible for any tax credit or deduction under the law, to avoid receiving any income tax notices from the Federal Board of Revenue (FBR).