Taxation is very important for Pakistan’s public and economic development. Most people are unaware of simple tax laws in Pakistan, which has led to errors in their tax filings.
Most importantly, understanding the basics of tax laws is also essential. It can cause fewer mistakes and make people more aware. This article will highlight the common tax mistakes to avoid in Pakistan.
Not Declaring All Sources of Income
Most people fail to report all their sources of income. Rental income, capital gain, dividends, and savings account profits should also be declared when filing your taxes.
Not declaring these income sources can lead to fines and even legal action by the FBR. Most taxpayers forget or are unaware they should report these other income sources. Individuals need to report these incomes as well. Filing them helps one be compliant and safe from any penalties.
Failure to File a Wealth Statement
Failing to file a wealth statement is another tax mistake made by the taxpayers. You have to submit a complete and proper wealth statement when filing your taxes. Submitting a wealth statement is a legal requirement and can lead to consequences if not submitted with the tax forms.
The wealth statement includes a required comprehensive statement of all assets owned in the tax year, such as residential, vehicles, bank accounts, and business shares. Not declaring these assets can get you on the government’s radar. Taxpayers should avoid penalties and ensure their wealth statement is complete and accurate.
Submitting Income Tax Returns Late
Another common tax mistake Pakistanis make is failing to file within the deadline. Filing returns after the deadline attracts a minimum fine of Rs 1000 for individual filers and businesses. Companies and AOP’s have to pay a fine of Rs 20,000 and Rs 10,000 respectively incase of late filing. Filing late also causes individuals to lose their active taxpayer status.
Remembering the tax deadline is very important for all filers in Pakistan. It helps you avoid fines and results in compliance with the authorities.
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Incorrect Calculation of Tax Liability
Another common tax mistake to avoid in Pakistan is wrongly calculating their tax liability. This is caused by either misinterpreting the tax laws or making errors in self-assessment. It can cause people to pay less or more income taxes, leading to scrutiny from the FBR.
It is recommended that you use a reliable tax calculator or seek a professional tax consultant like Sidekick to help you avoid such issues. Ensuring proper and accurate tax liability calculations will save taxpayers from extra financial burdens and audits.
Wrongfully Claiming Tax Credits and Deductions
Most taxpayers also make the mistake of claiming tax credits and deductions incorrectly. It is very important to understand the tax laws for this. Falsely claiming benefits for which you are not eligible can lead to audits, fines, or legal actions by the FBR.
Taxpayers need to know clearly what they are entitled to and when they need to get advice from tax experts. This helps people and businesses avoid getting penalized and ensures they comply with the law.
The Role of Sidekick in Avoiding Tax Mistakes
Sidekick provides a tax management solution that is remotely available in all cities of Pakistan to keep you away from typical tax complications. Sidekick simplifies the tax filing process and helps keep individuals compliant by offering expertise in local tax laws.
Sidekick helps taxpayers avoid the complications of the Pakistani tax system with its support. Get Sidekick expertise to avoid the common tax mistakes in Pakistan.
Conclusion
Knowing about common tax mistakes is essential, as it will help avoid penalties and other legal matters. With expert advice, proactive tax management prevents the costs associated with noncompliance with the tax laws. Therefore, it is very important to know these tax mistakes to avoid them in Pakistan.