The Federal Board of Revenue has decided to take a legal action against the non-filers of income tax returns particularly nearly 1.6 million National Tax Number (NTN) holders for the Tax Year 2011 from January 2012.

In this regard, the FBR has issued instructions to the Chief Commissioners of all Large Taxpayer Units (LTUs) and Regional Tax Offices (RTOs) to start issuing legal notices under section 114 of the Income Tax Ordinance 2001 from first week of January 2012 and enforce filing of returns from all the NTN holders.

It is learnt that the last date for filing of returns by business individuals, salaried persons and association of persons (AOPs) has already expired on Nov 30, 2011 and the filing date for companies will expire on December 31, 2011.

Out of 3.2 million NTN holders, around 50 percent are non-filers of returns and action would also be taken against these non-filers NTN holders.

Thus, nearly 1.6 million NTN holders have failed to file their returns for the Tax Year 2011, sources added.

According to the FBR's instructions issued to all Chief Commissioners of LTUs and RTOs here on Tuesday, the master index of National Tax Numbers (NTN) is growing day by day and now its size has reached to 3.2 million. All the taxpayers who have obtained NTN are required to file the income tax returns u/s 114(1)(vii) of the Income Tax Ordinance 2001, but it is noticed with grave concern that a large majority of the NTN holders do not file the return of income.

This reflects adversely on the performance of field formations. Urgent steps are required to be taken to bridge the gap between filers and NTN holders.

In order to ensure compliance by the non-filers it is imperative to identify the non-filers. This can be achieved only when the returns filed manually are entered in the system.

The FBR further stated that in order to compile the inventory of all the returns received for Tax Year 2011 and pending their data entry in Integrated Tax Management System (ITMS) it has been decided that CNIC, NTN, income declared, tax payable and tax paid with return will be entered to computer by December 31, 2011 using Excel Sheet. This Excel Sheet consolidated for each return received manually by the RTO (up to December 25, 2011) should reach the Chief (IR Operations) via e-mail on close of December 31, 2011. The stock position communicated to the board in this manner will only be accepted in the monthly progress report (MPR) of the RTO, FBR's instructions maintained.

These stock lists will be consolidated in national inventory of returns and the same will be used in determining the non-filers.

The information of non-filers would be available in the ITMS for further follow-up and enforcement of returns from non-filers, FBR said.

The FBR's instructions added that the notices under section 114 for the tax year 2011 shall be issued in all cases in the first week of January 2012 and certificate to this effect furnished to the Board by January 10, 2012. Proper service of notices has to be ensured and the notice servers and inspectors should be used for this purpose.