Difference Between Filers and Non-Filers in Pakistan

People these days are in constant debate about whether to be a filer or a non-filer in Pakistan. But you might not be aware of what exactly these terms mean. Considering this, I am here to help you out. Let’s have a detailed look at what filers and non-filers are, along with their advantages and disadvantages. 

Understanding the Filers

The filers are people, organizations, or businesses that are officially registered with FBR and are responsible for annual income tax returns. Since taxpayers are on the FBR’s filers’ list, they are provided with the financial benefits. However, know that these taxes need to be submitted on time, or else the filer pays a penalty. 

Eligibility Criteria For Becoming a Filer in Pakistan

People who run a business, either a small shop or a big brand, own a property or vehicle, earn more than Rs. 600,000 per year, and are 18+, are eligible to become a filer in Pakistan.

Advantages of Being a Filer

The following are the advantages of being a filer in Pakistan. Have a look! 

Reduced Tax Deductions on Banking Transactions: Filers experience fewer deductions during cash withdrawals and transactions. The filer pays 0.3% tax on cash withdrawals of more than Rs. 50,000, whereas the non-filers have to pay more.

Reduced Property Taxes: The filers have to pay lower tax rates while purchasing property, unlike the non-filers. 

Business Benefits: It is easier for people to run their businesses who are filers. This makes import and export easier; on the other hand, non-filers have to experience certain restrictions. 

Vehicle Purchase and Sale: Being a filer makes vehicle purchase easier with lower taxes. 

Disadvantages of Being a Filer 

Besides all these advantages of being a filer, it also comes with some of the mentioned disadvantages:

No Late Tax Payment: A filer may experience penalties for delaying tax payments. 

Complex Filing Process: Getting a filer in Pakistan may feel like getting into trouble for some people due to the lengthy procedure and keeping records of documentation, receipts, and more.

Understanding the Non-Filers 

Unlike filers, the non-filers are not registered with FBR and do not pay their taxes to the government. However, such people or businesses are still involved in paying taxes indirectly without getting them on the record of the active taxpayers list. 

Advantages of Being a Non-Filer

The following are the advantages of being a filer in Pakistan: 

No Financial Records: The non-filers have no financial information recorded with the FBR. 

No Late Payment Burden: Since non-filers do not pay their taxes to the government, they are burden-free from the late payments. 

Disadvantages of Being a Non-Filer

Have a look at the following disadvantages of the non-filers: 

No Documented Tax History: As there are no tax history records of non-filers, they may experience challenges when looking for financial opportunities due to the lack of income stability evidence. 

Increased Withholding Taxes: Higher tax rates on purchasing properties, banking transactions, and vehicle purchases. 

Travel Restrictions: Non-filers can experience difficulties in getting visas for some countries and restrictions on purchasing tickets.

What is the Difference Between Filers and Non-Filers 

Conclusion

To sum up, many people stay confused between filers and non-filers in Pakistan, but the difference is quite simple. The filers are registered and pay annual taxes, whereas the non-filers are not registered and do not pay their taxes. However, it is important to know that the filers are likely to experience lower tax rates on the purchase of property, vehicle, or while traveling, unlike non-filers. Now that you have understood the difference completely, becoming a filer is definitely a smart choice for people in the long run. 

FAQs