ISLAMABAD: The Reforms and Revenue Mobilization Commission (RRMC) has recommended the Ministry of Finance to abolish the requirement for the filing of the wealth statement for the initial first two years of the filing of the income tax returns.

The RRMC recommend that the most technical statement in the entire income tax return form is the wealth statement and its reconciliation. Although the form is known as the income tax return, however, a major portion of the same, for the majority of taxpayers, covers the wealth statement and its reconciliation.

In order to encourage return filing by potential/new taxpayers, it is recommended that requirement for the filing of the wealth statement should be waived for the initial first two years of the filing of the income tax return. Moreover, for existing taxpayers, the format of the wealth statement should be simplified. The drop-down menu should also be provided in the incoming and outgoing columns, especially gifts.

Business bank account opening: RRMC for making NTN mandatory

This would ensure simplification of filing of the wealth statement for existing taxpayers and to encourage/welcome new taxpayers for its declaration.

The RRMC further recommended that Section 165(8) of the Ordinance read with Rule 44(4) of the Rules provides that the taxpayer is required to submit annual reconciliation of payment with taxes withheld by them by the due date of filing of the tax return. However, the requisite format has not yet been prescribed by the FBR.

It is recommended that the requisite format for monitoring of withholding taxes should be prescribed at the earliest in order to ensure compliance of Section 165.

This would facilitate taxpayers for preparation of the reconciliation in the prescribed format and it would also help to reduce the time for monitoring of withholding statements by the tax officer and thereby, causing early and timely disposal of monitoring proceedings by the tax officers, the RRMC added.

Copyright Business Recorder, 2023