Monthly & Annual Tax Return
All companies are required to file an income tax return each year by 31 December for the preceding financial year (1 July through 30 June) by accounting for business income on an accrual basis. If the special year granted by the tax authorities ends between 1 July and 31 December, then the tax return is required to be filed by 30 September following the year-end.
An across-the-board self-assessment scheme is in place whereby assessment is taken to be finalised upon filing of the return. The Commissioner, however, has powers to amend the assessment if it is believed that the assessment made is prejudicial to the interest of revenue or on the basis of audit or definite information that any income chargeable to tax has escaped assessment/has been under assessed/has been assessed at a lower rate or there is any misclassification between various heads of income. These powers are to be exercised within a prescribed time frame. In the case of transactions between associates, the Commissioner can substitute the transaction value with the fair market consideration. The Commissioner is also empowered to determine tax liability according to the substance of the transaction, disregarding formal arrangements between the parties.
Persons subject to final tax regime were required to file a statement prescribed in the law in lieu of return of income. The concept of statement in lieu of return has now been omitted with such persons now required to file a return income. The FBR is to prescribe returns for different classes of income or persons, including those covered by final tax regime.
Tax authorities can require a person whose name is not appearing in the ATL to file an income tax return for any of the last ten years.
Filing of a revised return requires prior approval of the Commissioner, which has certain limitations and conditions. The Commissioner is also empowered to grant approval for revision of return for bona fide omission or wrong statement.
A time limit for notifying an annual income tax return form under the Ordinance has been introduced.