Proposals for The Budget-2010-2011

PROPOSALS FOR THE BUDGET-2010-2011 PROPOSALS FOR THE BUDGET-2010-2011 [Income-Tax] By Muhammad Ashraf Raza, Tax Advisor, Bahawalpur In current monetary position of Country, we understand that important problems in taxation laws which needs amendments/ rationalization are as under: 1. Broadening of Tax Base in the Country 2. Areas/sectors which are not properly taxed or not taken under tax laws 3. Misuse of Exemptions and taxation laws 4. Multiplicity of Taxes 5. Rationalization of Taxation Laws 6. Facilitation for taxpayers I. . BROADENING OF TAX BASE It is now well-settled through studies that bigger the tax base is, the lesser the rates of tax can be, further efforts must be made to bring more people into tax club. The taxes must be equitable and fair between different classes of society. All the segments of the society should be brought in the tax net. To give incentive to new taxpayers they can be exempted from audit for a period of 5 years, it will encourage broadening the tax net. Like assessment years 1991-1992 to 2000-2001, a scheme may be announced; whereby the new taxpayer may be allowed amnesty to declare capital three times of the declared income for the year and no question would be asked for the income earned / business activities conducted by them in the previous years. In this regard following proposals are proposed for broaden the tax base. 1. Installation of commercial electricity/Sui Gas meter and Telephone connection may be subject to obtaining of NTN certificate. 2. Provision in law be made to make it obligatory for various local authorities to require NTN certificate from the applicant before providing various commercial services. 3. Purchase of immovable property may be subjected to production of NTN certificate. 4. Provision in law may be made to make it obligatory for Banks and other financial institutions to require NTN certificate from the applicant before providing various services and bank products. 5. Provision in law may be made to make it obligatory for Private Universities, Medical Colleges and other educational institutions to require NTN of parents/guardian certificate from the applicant before offer him admission. 6. Tax Credit for individuals on submission of evidences of expenses on medical treatment, children education and all other household expenses may help in broadening of tax base and improvement of documentation. If an individual has incentive of tax credit then he/she will try to get evidence of every expense/purchase he/she incurs/makes. Encouragement and Incentives be provided for Savings and Investment in taxation laws can be helpful to broaden the tax base. 2. SOME SECTORS NOT EFFECTIVELY UNDER TAXATION LAWS: 1. Revenue collection by provinces from agricultural sector is not as per its potential due to lack of effectively implemented tax laws. It is suggested that exemption provided to agricultural sector under section 41 of the Income Tax Ordinance, 2001 be withdrawn and brought under taxation like other heads of income. This will help in eliminating many distortions in the existing tax policy. 2. It is also a well-known fact that the brokerage houses have not diverted their respective earnings towards the process of documented economy, but have further engaged themselves into the activities which do not contribute much in the shape of taxes. This sector required proper monitoring and amendments in laws. 3. It is noted that vegetables and fruits markets are an un-organized sectors where people are earning taxable income but remained out of tax net. Market Committees duly approved by Provincial Governments are monitoring and implementing these market affairs. Fruits and vegetables are duly auctioned in the vegetable and fruits markets by auctioneers who are collecting 2% to 5% from the successful bidder on each bid for the Market Committee. 4. It is suggested to obtain complete details and prepare a data base of all the owners/holders/allottees of the property , cars, club membership, utilities , vehicles, buses, credit cards, investment in fixed deposits, national saving schemes and stocks. 5. It is suggested to obtain regularly information for generation a database from the Registrars & Housing Societies for registration/transfer of Immovable Property, Clubs, Motor Vehicle Registration Authorities, Credit Card issuing authorities, Central Depository Company and Financial Institutions maintaining accounts and distributing profit more than statutory taxable limited. 6. Submission of annually statements by the Registrars of Universities, Medical and Dental Colleges and other professional/non-professional educational institutions regarding the detail of the students which are getting education on self-finance basis. 3. MISUSE OF TAX LAWS: 1. Universal Self-Assessment Scheme: The Universal Self-Assessment Scheme may be re-visited because of the fact that in the grab of said Scheme, non-compliance ratio as well tax evasion culture has improved. The tax collection under sections 137 and 147 has considerably been decreased because of the fact that no yardstick is available for those cases in which the income declared is continuously being reduced by the taxpayers. The present Universal Self-Assessment Scheme may be revised giving certain increase in ratio of the income declared, tax paid for the last year, as has been done in the past. 2. Exemption in Second Schedule of Income Tax Ordinance, 2001: The Second Schedule to Income Tax Ordinance, 2001 still contains so many exemptions and tax concessions which vitiate the principle of equality and creates disparities among the taxpayers. This distortion is required to be removed from the tax statutes. Accordingly the Second Schedule is to be overhauled to minimize exemptions and concessions in tax especially:- (i) The allowances and perquisites allowed to legislators, men in uniform, judiciary and other privileged classes under clauses (51), (52), (53), (54), (55) & (56) be removed from Part-I of Second Schedule. (ii) The exemption under section 111 (4) of the Ordinance to the foreign exchange brought into Pakistan through proper banking channel should only be allowed to those remittances which are invested in the business undertaking. (iii) The exemption under Clause (92) of the Second Schedule is being misused by educational institutions. Schools situated in cities and posh localities may therefore be excluded from the ambit of clause 3. MULTIPLICITY OF TAXATION Manufacturing sector in Pakistan plays a vital role especially in terms of improving the employment statistics of the country and directly contributing towards the GDP. They face in addition to normal taxation, taxes on account of WPPF and WWF which resultantly increases their cost of doing business thus making their products less competitive with importers. Furthermore the manufacturing sector bears many other levies from Labour Department, Social Security Department, 'Old Age Benefit Department and Minimum Wages Department. This sort of levy further discourages the existing manufacturers to expand their business in the country and at the same time discourages foreign investors in setting up producing unit in the country. It is suggested that the exemption limit for charging the Workers Welfare Fund be enhanced to 5.00 million and the taxpayers filing statement of final tax under section 115(4) of the Income Tax Ordinance, 2001 be exempted form levy of Workers Welfare Fund. RATIONALIZATION Of TAXATION LAWS: Reduction of Tax Rates and enhancement in taxable limit of income: Presently different thresholds of basic exemption are provided for different heads of income, which is against the justice and equity. In order to bring the basic exemption from business and rental income at par with the salary income the limit of basic exemption under the head business and income from property, and keeping in view the high inflation rate and increase in salaries and wages the basic limit of tax for salaried individuals also should be enhanced to Rs.300,000. Corporate taxes are very high in Pakistan as compared to other developing and developed markets. The rate of Income Tax for the corporate and non-corporate sectors is reduced by 5%. The present statutory limit of exemption under the Income Tax law be increased to Rs.300,000. The import of plant and machinery and raw material for own use should be exempted from withholding of tax under section 148. These measures will not only promote investment in Pakistan but also encourage companies and investors to further broaden their business as well as helpful to broaden the tax base. Apportionment of Expenses: Section 67/rule 13 should be suitably amended to make it obligatory for a person deriving taxable and exempt income to maintain separate accounts for taxable and exempt sources. Minimum Tax under section 113: Minimum tax should be rationalized. For this certain amendments are required to be made in Income Tax Law. As it is levied on the companies which are not paying tax under normal law, hence make it possible to bring a large number of Taxpayer Company in the tax net. There is a provision in law to carry forward the amount of tax (minimum tax) to the next years to make it adjusted against other years' tax liability. Then there is no provision in the law to get refunded the balance amount that is not adjusted against tax liability. It is proposed to omit this provision from the law because it is of no use rather creating ambiguity in the law. As far as revenue impact of the omission of this section is concerned, it will have positive impact on revenue. With the deletion of the provision of adjustment of minimum tax against tax liability of coming years, taxpayer will have to pay tax (minimum tax) on the basis of turnover for the year without making any adjustment of tax liability for the year against the payment of minimum tax that was paid in the previous year. It is rationalized as the minimum tax is based on turnover and not on the profit. Although the companies are not earning profit but they have made sales and against which they have to pay tax. Adjustment of Withholding Taxes for Retailors: {Section 113(A)(3) & (B)(c)} Subsection 3 of section 113A and subsection (c) of section 113B of the Income Tax Ordinance, 2001 provides that the retailer shall not be entitled to claim any adjustment of withholding tax collected or deducted under any head during the year. To provide relief and facilitate the small business entrepreneurs it is suggested to abolish this restriction. Statement under section 115(4) At present there is no provision in the law to work back the income of those taxpayers who file statements of final taxation under section 115(4). There should be such provisions as to work back the income of the taxpayer who file statements under section 115(4). Unlike provisions of section 114, there is no provision in section 115 to revise these statements where any wrong statement omission is discovered by the taxpayer. There should be a provision to revise statements filed under section 115. Revision of statement under section 115(4) Rationalization of section 122 Section 122 of Income Tax Ordinance empowers Commissioner of Income Tax to amend assessment orders issued under section 120 etc. , within a period of five years. It is suggested that this period of five years should be reduced to two years. Advance Tax paid by the taxpayer under section 147 Subsection (2) of section 147 of the Income Tax Ordinance, 2001 provides where the individuals or association of persons latest assessed taxable income (excluding incomes chargeable to tax under the Presumptive Tax Regime) is two hundred thousand and above, shall be liable to pay advance tax in four equal quarterly instalments. The limit of Rs.200,000 was substituted with Rs.150,000 by the Finance Act, 2003. It is suggested strongly to enhance this limit may please be extended to Rs .500,000 . Levy of withholding tax on imported Edible Oils in the PTR Mode: The present structure of income tax application on Edible Oil and Vegetable Ghee industries vide Finance Bill 2009 is as under: (1) On import of raw material @ 3 % under section 148(8) as minimum tax liability instead of Final Discharge. (2) On local produced oil @ 2% as fixed tax. (3) On local produced from local oil refineries @ 2% as fixed tax. It is strongly suggested that the status of 148(8) as final discharge of liability/PTR, and secondly the tax paid on packing material must be refundable as previously, to reduce the burden of cost of production on Vegetable Ghee/Cooking Oil to provide relief to consumers through decrease in rate of withholding tax at import stage by 2%. To review the interpretation of locally produced oil and withdraw the Advance Income Tax of 2% applicable on buyers for buying Refined Palm Oil from the local Edible Oil Refineries. Or the same should also be applicable on the sale of imported RBD Palm Oil. The commercial/ industrial importers and the refiners may be treated as equally to eliminate distortions in the existing tax policy Income tax deducted on supply of goods under section 152 CURRENT STATUS: Section 153(a) of Income Tax Ordinance, 2008, provides for deduction of Withholding Tax on payments made against sale of goods. The tax rate applicable under Div III of Part-III of First Schedule of ITO, 2008 is 3.5% of the gross amount payable in case of goods other than rice, cotton seed or edible oils. The term Gross Amount under section 153(2) includes the sales tax, if any, payable in respect of the sale. Under section 153(6) The tax deducted under this section shall be a final tax on the income of a resident person. However, the provisions of subsection (6) insofar as they relate to payments on account of supply of goods from which tax is deductible under this section shall not apply in respect of [a company] being a manufacturer of such goods. It is suggested that Sales Tax and FED levies should not be added into the value of goods for deduction of tax under sections 147(9) and 153(2) as it tantamount to "Tax upon tax". In section 153(6A) words "a company" should be replaced by words "a person" restoring the position prior to Finance Act, 2008, allowing all categories of manufacturers to claim adjustment of tax deducted under section 153(1). Present rate of 3.5% is very high and it is nearly impossible for intermediate suppliers and wholesalers to make supplies with such a heavy tax being levied on supplies made by them. Thus discouraging supply chain formation and documentation of economy. We, therefore, propose as follows: The tax rate may be reduced to 1% to 2. % of the sale value excluding sales tax and the tax status under section 153(6) be retained as final discharge of liability. Presently individuals/AOP's conducting business as manufac turers are liable to tax at the rate of 3.5% of their receipts and such tax constitute full and final discharge of tax liability. Whereas in the case of a company conducting business as manufacturer is subjected to normal taxation. It needs rationalization irrespective of corporate or non-corporate sector. Scope of withholding taxes should be rationalized and brought under final tax regime. Tax on commercial imports may be enhanced to 5% and made final. Payments for Goods and Services - Section 153 (a) Increase in threshold for withholding of tax:-- (i) Threshold for withholding of taxes are fixed more than ten years back and required to be enhanced. (ii) Exemption or lower rate certificate related under section 153 are not allowed for all manufacturers-cum-suppliers (Individual and AOP), needs rationalization irrespective of corporate or non-corporate sector. Small Company under section 59A: The concept of "small company" was introduced through Finance Act, 2005. Such companies were given certain incentives to encourage the corporate sector. One of the incentives was that small company was not required to withhold tax on payment made for goods and services. This incentive was suddenly withdrawn through Finance Act, 2008. This action of F.B.R. has shattered the taxpayers confidence. In order to restore the confidence of taxpayers the incentives provided to the small companies at the time of introduction of this concept are required to be restored. Supply of imported raw material by non-importers: The rate of Withholding Income Tax rate should be 1% instead of present 3.5% as theses goods are already charged to Income Tax at import stage. This shall facilitate chain formation in supply of imported goods. Withholding Tax on bank cash withdrawal under section 231A: The withholding of tax on withdrawal of cash from bank blocks huge funds of taxpayer and in the end not contributing much to the exchequer, because in most of the cases the same is being refundable to the taxpayer especially in the PTR cases. It is not only creating lot of problems but is also against the policy of the Government to avoid such withholding which ultimately results in refund of tax. Presently tax at the rate of 0.3 % is being deducted on the cash withdrawals exceeding Rs.25,000 per day. It is suggested that the rate of deduction of tax be reduced to 0.1 % and the threshold of withdrawals be raised to Rs. 100,000/- per day. It is further suggested that tax should not be deducted from the account-holder having NTN and is an existing taxpayer. It is, therefore, proposed that the relevant provisions may appropriately be modified. Withholding of taxes under sections 234-236 The withholding of tax on several utility bills especially on electricity bills in block funds of taxpayer and in the end not contributing much to the exchequer, because in most of the cases the same is being refundable to the taxpayer. It is not only creating lot of problems but is also against the policy of the Government to avoid such withholding which ultimately results in refund of tax. In tax year 2009, tax collected under section 235 in the cases of individual and AOP was no more refundable. As per amendment made through Finance Act, 2009 tax collected under this section exceeding Rs.36,000 per annum will only be refundable. It is, therefore, proposed that the relevant provisions may appropriately be modified, and the advance tax on utilities shall not be charge on all industrial consumers or having Final Tax Regime (FTR) income. Presently all taxpayers including FTR cases are subjected to withholding tax. No exemption clause is available to the persons subjected to FTR. It is suggested that the exemption clause be extended to issue exemption certificate to such persons. Withholding tax on CNG Stations under section 234A On the one side Government force the taxpayer for maintenance/furnishing of books of accounts under the law on the other hand introducing new sectors in PTR. Presumptive tax regime needs to be done away with. Due to this regime for instance huge investment made in the installation of CNG Stations is being ignored. By bringing PTR cases to normal taxation provisions, the maintenance/furnishing of hooks of accounts be enforced. However keeping in view of the current status of CNG station in Taxation Laws as under: Section 234A(1) of the Income Tax Ordinance, 2001 relating to consumption of the Gas from the CNG station is the final Tax Liability in pursuance of subsection (3) of the said section. However, subsection (4) of section 234 A stipulates that a tax payers shall not be entitled to claim any adjustment of withholding tax collected or deducted under any other head during the tax year. To avoid double taxation and hardship to the taxpayers. It is suggested strongly that: (1) The tax so collected under section 234A is final tax for CNG stations; these should be exempted from other tax deductions as defined in 231A, 235 etc. (2) The CNG stations should be allowed to claim adjustment of all other deductions in any head. (3) The deletion of the subsection (4) of section 234 A and since CNG station falling under FTR, to avoid Double taxation exemption of Withholding Tax deducted in the Electric Bills may immediately be implemented. (4) Further Tax Exemption Certificate should be provided for supplies of CNG to Customers who deduct tax under section 153 to avoid Double Taxation. Refunds under section 170 Under section 170(4) of the Income Tax Ordinance, 2001 the Commissioner shall within 45 days of receipt of refund application serve on the person applying for the refund, an order in writing of the decision after providing the taxpayer an opportunity of being heard. Large number of refunds are pending due to pending verification of payments made by the taxpayers. The refund claim of excess amount deducted under this section should be allowed to every taxpayer as vested right and norms of natural justice. It should be mandatory for all the refund claimants, to give bank account number where the refund cheque should land after all the procedural formalities. Secondly, the taxpayer should give undertaking that he does not operate any other account in the name of business. Section 170(4) may suitably be amended in view of the above proposed amendments, particularly substituting the 60 days with 15 days within which the Commissioner shall pass the order, and in case of his failure to pass the order within the stipulated period of 15 days, the refund application be deemed to have been accepted by him. The time period for processing of refund application is extended up to 90 days under section 170(4) of the Income Tax Ordinance, 2001 that still is too short. Sometime officers feel handicap due to the non-availability of records. It is proposed that period of at least 140 days may be given for issuance of refunds by making necessary amendments in law. Audit under section 177 Due to non-availability of scope of audit, these auditors tend to start Re-Assessment of the completed Assessment. Audit objections are thrust upon the Taxation Officers. Frivolous demands are created to the determent of taxpayer. It is therefore proposed that parameters of Audits by Internal Auditor and Revenue Department Auditors be fixed. Presently all returns of income filed, qualify for acceptance under the Self-Assessment Scheme and the income or loss and Tax declared in the return by the taxpayer is accepted. It will create and further strengthen the confidence of taxpayers, more tax will be paid by taxpayers, specially the Corporate taxpayers, to avoid re-opening of assessments, It will enhance the taxpayer confidence due to sincerity and integrity of tax regime and it will reduce the discretionary powers entrusted to the Commissioner for re-opening the assessment. Section 177 of the Ordinance provides that the Federal Board of Revenue may lay down criteria for selection of any person for an audit of person's income tax affairs, by the Commissioner and shall keep the criteria confidential. The cases of taxpayers are being selected for audit under section 177 simultaneously for more than one tax years. Subsequent tax years are being selected without first finalizing the earlier tax years already selected. This practice is creating hardship to the taxpayers and badly affecting the day to day business activities as the taxpayers are required to divert lot of resources to comply with the audit proceedings. It is suggested that audit proceedings for one tax year should be initiated at one time and should be finalized before selection of other tax year. The selection of subsequent tax year should be made, if necessitated by the audit findings of audit finalized. It is suggested that in order to restore the confidence of taxpayers, the selection of audit cases be made within one year from the filing of tax return. The time limitation should be provided in the law. As the selection of audit after expiry of 4 to 5 year is creating hardship to the taxpayers. Selection of cases for audit should be made on scientific basis, after only cross verification with third party information. Carried Forward of Business Losses In order to overcome the current liquidity problems of the business community appropriate amendments be made in section 208 of the Companies Ordinance, 1984 to exclude the private limited companies from the ambit of section 208. Appeal Process under sections 124/127/129/131/132 Appeal process under sections 124/127/129/131/132 from the time the assessee files his tax return to the time when assessment is deemed to be completed should not exceed two years by the following method:--- (i) Inland Revenue Appellate Tribunal to give its decision within three months of filing of an appeal [as in the case of C.I.T.(A)] (ii) In case as per section 124(4) C.I.T. required to give/issue appeal effect within the period of two months is not adhered to the taxpayer may assume that relief to has been given. (iii) The time period to the Commissioner Inland Revenue to amend an assessment order should be rationalized to maximum of two years. Disposal of appeals by Commissioner Inland Revenue (Appeals) Subsection (4) of section 170 provides that the Commissioner shall pass an order within sixty days of the receipt of application from the taxpayer under subsection (1) of section 170. The person aggrieved by such order passed may prefer appeal under section 127 before the Commissioner (Appeals). Section 127, however, provides appeal against order passed under section 170 but it does not contemplate appeal for not passing order under section 170. Thus in case no order is passed within sixty day's of the receipt of the application then no appeal can be preferred under section 127 to the Commissioner (Appeals). As a result taxpayer resort to complaints to FTO on account of maladministration owing to passing of no order as stipulated in section 170 and the department has to face embarrassment in order to avoid this embarrassment before the FTO, it is proposed that section 127 may be amended wherein it should be provided that in case no order under section 170(4) is passed within sixty days then appeal shall lie under section 127 of the Income Tax Ordinance, 2001 before the Commissioner (Appeals). Without prejudice to the above the right of appeal is the creature of statute. This right has been created in section 127 of the Income Tax Ordinance, 2001 being the governing provision relating to appeal before Commissioner (Appeals). But section 127(1) is silent if the Commissioner fails to pass an order under section 170(4). This creates an apparent anomaly in the law in section 127(1) if read with section 170(5). Disposal of appeals by Inland Revenue Appellate Tribunal: It is, proposed that said subsection (2) may accordingly be amended in the following manner:- "The Appellate Tribunal shall afford an opportunity of being heard to the parties and in case of failure to attend the appeal by the person filing the appeal, the Tribunal may proceed ex parte to decide the appeal on the basis of the available record". For rationalization in fiscal laws, and more particularly law governing income tax, it has been the practice to decide the matters on merits, as Income Tax Appellate Tribunal (IRAT) is the last fact-finding authority and by virtue of subsection (1) of section 132, the decision of the Appellate Tribunal on an appeal shall be final. Stay of Amount of demand Due to unrealistic and frivolous demands are created by the tax authorities due to pressure on them. According to principles of natural justice, automatic stay of demand upto 85% for first stage of appeal and 50% till the IRAT stage of appeal be provided (as was provided in the Repealed Ordinance, 1979). 5. FACILITATION FOR TAX PAYERS Simplification of laws, Statements and returns: We are of the view that taxation laws including forms, statements and other necessary documents may be simplified and must not be as complicated arid cumbersome as to cause needless inconvenience and hardships to the taxpayer. This is also an impediment in expansion of tax base in the country. There are also a number of short comings in the existing Return forms and statements. Registration of Taxpayers under section 181 The commencement of the centralized system for issuance of NTN has worsened the process instead of facilitating the taxpayers. Though the FBR has provided a facility to apply for getting NTN electronically or manually, but both the procedures do not help taxpayers in getting the number within the prescribed period of 48 hours. The registration process, which is supposed to be done in hours, has been halted for months because of the applications galore. The situation is so much deplorable that even for minor alteration or change in the existing NTN certificates, taxpayers have to undergo immense hardships and difficulties. Delays in the issuance of NTNs and lack of coordination between the FBR, Islamabad and field offices, like Regional Tax Offices and Large Taxpayers Units, are not only depriving taxpayer from getting the tax number within the prescribed time but is also deprives the national exchequer form billions of rupees in revenue along with tax returns. Under the laid down conditions by the FBR no taxpayer could get sales tax registration without NTN registration. This means that no business establishment could start functioning till it gets NTN and thereafter sales tax registration. Common Tax Identification: For automation and facilitation Common Tax Identification (CTI) number to be introduced for Companies and Firms and CNIC for Individuals. It is also suggested to issue only one number for all purposes. Deposit of withheld tax in Government Treasury: Companies are allowed to deposit all withheld taxes/deducted during a particular month on the 7th of the following month. This will ease the hardship borne by banks/companies as a collection agency. Filing of Monthly Statements of Withholding of Tax Filing of monthly statements for withholding of tax is not only increasing volume of works but also creating high cost of compliance. Moreover, it is not benefiting FBR; as such it is proposed that filing of monthly statement be substituted with annually or quarterly. Quarterly statements should be reintroduced instead of monthly statements. E-filing of returns and statements should not be made mandatory. Tax Incentive for Senior Citizens and Handicapped Citizens: Behbood Certificates and Pensioners Benefit Account can only be purchased by widows and seniors citizens and are exempted for deduction of tax but have to pay tax on filing of the annual return. It is suggested for the benefit of widows and the senior citizens due to reduction of profit rate and effect of inflation in the country they should be given special relief, by exempting them from tax on these certificates and accounts. Clause IA, Part-III, Second Schedule, Income Tax Ordinance, 2001 provides for 50 % reduction in income tax for taxpayer aged 60 years or more. It is suggested that income tax reduction should be increased to 75 % and the limit of annual income to Rs.600,000 from the present Rs.400, 000. Similar incentive is also suggested for the Handicap taxpayers as well. Income Tax Returns: Return forms (IT-1) which remained same for a few years were changed a year before. This should not be changed for the next few years, so that they become user friendly. Mentioning of business activity may kindly be made a mandatory requirement and any Return whether e-filed or manually filed, may be considered a deficient Return' if the said column is left blank by the tax payer and it be considered a case of "short document" for the purposes of issuance of a Notice under section 120(3) of the Income Tax Ordinance, 2001. It is experienced that a number of taxpayers who have taxable income and they are supposed to file returns within the due date, deliberately do not file returns and in the absence of any deference they become non-filers. Some of them however file the return at their own convenience and at the cost of revenue. No doubt late filing return attracts additional tax but question is not of the levy of additional tax, it is important that they withhold information necessary for audit which would further generate revenue. Mandatory e-filing of Income Tax Returns by AOP and Individuals: With the e-filing of income tax returns being made mandatory, especially for AOP's and specified individuals, their problems have actually been increased. Most of the traders are computer illiterate and are facing extreme problems in e-filing their income tax returns, therefore, Federal Board of Revenue (FBR) should immediately defer the condition of e-filing of income tax returns to provide relief to businessmen.