July 28, 2023
Pakistan is currently struggling with financial problems a lot. The drastic impact that Covid had on every country’s economy is unforgettable. Covid impacted countries like Pakistan, which already had not a very stable economy, the most.
For the past two years, the financial condition of Pakistan has become very problematic. Many businesses had to shut down due to the lockdown temporarily. These temporary shutdowns affected the middle class the most. They had to pay the rent of their offices and shops whether the government allowed them to open or if they got any sales. This led to the permanent shutdown of many businesses.
When businesses shut down, all the employees working in it also face the consequences. They face unemployment which has already been a major problem in the country for the past few decades. Mass unemployment shutdown of businesses made the country’s economy poor. Now the Covid situation is pretty controlled. In some parts of the country, it is non-existent. Given this, many new individuals have opted to start businesses again.
NTN and Tax Filing
Traders and merchants have been willing to import and export goods. It can also help strengthen the country’s economy if every individual liable for paying taxes takes responsibility for paying all kinds of taxes imposed on them. This does not only benefit the government or the country. However, it also benefits the individual applying to be a tax filer.
The taxes they pay to the government are returned by providing several facilities or exemptions from some taxes that the non-tax filers can not enjoy. But before applying for registration as a tax filer, you need to have an NTN. Getting an NTN for yourself or your business is systematic and easy.
Taxes are the primary source of government revenue. Without a country’s tax system, there would be no financial means to run the country. It would not be incorrect to say that citizens’ money helps run the countries. But it does not end here.
The government grants its citizens various advantages and facilities using these taxes. A country can flourish economically only if it has a proper tax system; therefore, Pakistan hasn’t flourished much.
Many Pakistani citizens evade tax, thinking it’s not to their advantage, but they’re incorrect. (Why? We’ve explained it in one of our previous articles.) Every Pakistani citizen who generates enough income should go for tax filing, and the first step is obtaining an NTN. In this article, we’ll talk exactly about that.
What is NTN?
NTN stands for National Tax Number, and every citizen willing to be a tax filer gets it. The processing and handling of national tax numbers are done by the Federal Board of Revenue (FBR). FBR is also responsible for the collection of taxes and other duties related to tax.
Any individual who runs a business or does a job and generates a considerable amount of income can apply and register in FBR to be a tax filer. They need to obtain a National Tax Number to start with the registration process. The Federal Board of Revenue uses this NTN to classify and distinguish among millions of tax records and payments.
Each citizen is granted their own separate National Tax Number. After being granted an NTN for themselves or their business, any individual can register as a tax filer. This would add their name to the Active Taxpayers List (ATL). Citizens on the Active Taxpayers List are offered many perks non-tax filers do not enjoy.
One of these many advantages is a 50% exemption from tax payments. There’s a lot more to it but first, let’s understand why and how to obtain an NTN.
Why should you register for an NTN in Pakistan? What are the benefits?
There are many valid reasons for registering as a tax filer with the Federal Board of Revenue. But the thing is that it requires obtaining an NTN beforehand. Being a responsible citizen of your country, it is upon you to work for its betterment.
The least you can do is ensure you don’t evade any tax. You are responsible for registering as a tax filer and paying all the taxes you owe. You will get a 50% exemption from the government on almost all kinds of taxes by obtaining NTN and registering for the Active Taxpayers List.
This means you have to pay half the taxes non-tax filers pay. Not only this, but you also become eligible to avail of the facility of a tax refund. There’s much more, such as if you are a manufacturer, you can import raw materials on comparatively lower tax slabs. Moreover, you can also become a member of the Chamber of Commerce and Industry.
By doing so, you can avail the advantages offered by the chamber of commerce and industry. Registering for an NTN is crucial if you want to become a tax filer. This allows you to avail all of these benefits. If you own a business, then you are liable by the Tax Laws of Pakistan to own a National Tax Number. However, if you fail to display your National Tax Number, you can face the penalty of paying 5000 rupees.
How to register for NTN in Pakistan?
Technological advances and the internet’s easy availability have made registering for a National Tax Number in Pakistan simple. You can register for an NTN at the ease of your home by visiting the official website of the FBR.
As the procedure has become online, you do not need to visit the Federal Board of Revenue office to obtain a National Tax Number. If you generate income that exceeds the government’s and Federal Board of Revenue’s limits, you are liable to pay income tax by getting an NTN.
Notably, if your annual income exceeds the limit of rupees 6 lacs, you’re liable to pay income tax. Before you begin, ensure that you already have all the relevant information and documents on your side to avoid any delay in the registration process.
The procedure is very simple. Just head over to the official website of the Federal Board of Revenue. There, go to the FBR IRIS portal. You would need to log in. Enter your credentials and login if you already have an account. But if you haven’t registered on the FBR website before, click on the option ‘Registration For Unregistered Person’.
Then, enter all the required information, such as your email address, phone number, etc. After submission, you will get a verification code. Enter this code, and you will finish creating your account.
After completing the signup process, log in to your IRIS account and click on ‘draft’. You will see an application form. Just put in all the required information. Ensure you enter the correct information, especially your CNIC, home address, phone number, bank information, wealth statement, income, etc. After filling it out, attach the required documents.
Before submission, carefully check the information, as you won’t be able to change it later. Lastly, submit the application form, and you will receive your National Tax Number within the next few working days.
The Required Documents
There are certain documents that the Federal Board of Revenue requires from you before granting you a National Tax Number. It is usually for verification purposes and for maintaining records. You would need a copy of your CNIC, electricity bill, Letterhead, Rent agreement (if you don’t own your premises), and Bank Account details.
Now that we have explained an NTN and how to get one. It’s your turn to step ahead and apply to become a tax filer. To be a tax filer, you need to have some source of income, whether from a business or a job.
Many Pakistani citizens do not consider tax evasion as bad as it is. They think it doesn’t affect the country’s economy at a large scale, and by avoiding paying their taxes, they can save considerable money. In reality, they are proving themselves not to be just irresponsible citizens but also depriving them of the advantages that tax filers enjoy.
After going through our article, we hope that you can now understand what an NTN is and why getting one is important.
Good luck with applying and becoming a tax filer. Now, you can enjoy the eternal advantages the government offers tax filers!
A highly skilled tax consultant specializing in Pakistan’s intricate tax laws and regulations. With over a decade of experience in the field, he has helped countless individuals and businesses navigate the complexities of taxation. His expertise lies in optimizing tax strategies, ensuring compliance, and maximizing returns for his clients. John’s in-depth knowledge of Pakistan’s tax system and dedication to staying up-to-date with ever-changing laws make him a reliable and sought-after advisor. Whether it’s tax planning, filing, or resolving tax-related issues, clients trust John’s proficiency and commitment to achieving financial success while remaining fully compliant with the law.