ISLAMABAD – According to media reports the number of tax filers for FY18 is2.34 million – the highest figure ever. But that number alone should not bea reason to cheer.
In absolute terms, total number of new filers will also be highest ever –611,540 new filers in FY18, compared to 590,989 in FY17. But in percentageterms, growth has actually fallen to 35 percent in FY18 compared to agrowth of 52 percent in FY17.
Media also reports that filers for FY19, provisional numbers of which areexpected to be reported by December 2019, will land at around4 millionlink. Thiswill be touted as a milestone, if indeed that expectation becomes a reality– because that would be about 71 percent growth over 2.34 million filersreported for FY18.
But on standalone basis, that too won’t be a reason to cheer, since as yetthere is no kind of irrefutable evidence to show that growth in filers overthe last few years has in fact led to material growth in tax collection.
Read Top Stories
BR Research’s analyses of tax directories FY13 to FY17 shows that nearly 50percent of the increase in filers in FY17 came from those who filed zeroreturns or returns of less than Rs1000 (the directory for FY18 hasn’t beenreleased yet). This number was 25 percent and 9 percent in the immediatelytwo preceding years respectively. If the growth in filers in FY18 issimilar to what was observed in FY17, then it’s not really a reason tocheer. One could, of course, argue that at least a greater number of peopleare in the system – the so-called tax net. But whether or not those peoplewho are now in the system, many of whom filed the return only to avoid thepenalty of being a non-filer, are being graduated to proper taxpayingfilers? Or is it so, and it is surely in the realm of possibilities, that amajority of those who filed zero returns or returns ofless-than-1000-rupees are in fact presenting a true reflection of theirincomes and expenditures to the tax body?
