In the name of Allah,

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In the name of Allah, the most gracious and most
merciful.
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Institute of Cost and Management Accountants Of
Pakistan Karachi Branch Council
Seminar on E-Filing Of Tax Returns
Presentation by Abdul Qadir Memon Former
President, ITBAK February 25, 2005
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Technology is reshaping this economy and
transforming businesses and consumers. This is
about more than e-commerce, or e-mail, or
e-trades, or e-files. It is about the e in
economic opportunity. ---William Daley, U.S.
Commerce Secretary
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History and Development Of E-Filing
The transfer of personal and business information
electronically has expanded rapidly during the
past decade. Individuals today can access
business and contact information via landline,
cell phones, pagers, Blackberry computers and
other devices almost anywhere. While business
transactions used to require the physical
delivery of paper documents, many can now be
processed much faster electronically. Tax return
preparation is no exception electronic filing
(e-filing) has become commonplace.
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History and Development Of E-Filing
The Internal Revenue Services USA (IRS) exactly
20 years ago began its endeavor into the world of
electronic services by partnering with industry
and the Tax Professional Community. The IRS
started the e-file program as a pilot project for
the 1986 filing season. During the test year,
five third party transmitters were approved by
the IRS to file tax returns electronically they
submitted 25,000 returns at three locations of
USA and initially tax preparers could file
returns electronically only if no tax payment was
due.
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History and Development Of E-Filing
The taxpayers that could participate in the
program and the types of returns they could file
were limited. Exactly after ten years i.e., in
the year 1996 the Electronic Federal Tax Payment
System (EFTPS) was implemented by IRS, which
allowed individuals and certain business
taxpayers to pay their federal taxes
electronically.
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History and Development Of E-Filing
After 3 years the electronic payment program was
expanded and an electronic funds withdrawal
(direct debit) payment option was included in tax
software, which allowed individual taxpayers to
electronically file balance due returns and pay
at the same time. The credit card payment option
was also introduced which allowed individual
taxpayers to either e-file balance due returns
and pay by credit card at the same time or pay
separately by phone or Internet.
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History and Development Of E-Filing
Today in USA more than 150,000 tax preparers
nationwide are authorized to e-file taxes on
behalf of their clients. During the fiscal year
2003 nearly 900 million of taxes were paid by
Credit Card, more than 1 billion of taxes were
paid through the Electronic Funds Withdrawal
(Direct debit) option. As of October 2004 more
than 63 million individual returns had been filed
electronically out of which 42 million were filed
by the tax Professionals.
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History and Development Of E-Filing
In order to encourage the IRS has recently
introduced e-Services eligibility whereby
authorized e-file providers, who are active
participants in the IRS e-file program and who
e-file five(5) or more accepted individual or
business tax returns in calendar year can use the
incentive e-Services products viz Disclosure
Authorization (DA), Electronic Account Resolution
(EAR), and Transcript Delivery System (TDS).
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History and Development Of E-Filing
The importance of Electronic Filing of Tax
Returns worldwide is getting immense importance.
As per the Internal Revenue Service (IRS)
Restructuring and Reform Act of 1998, it is
mandatory for the IRS Oversight Board to submit
an Annual Report on Electronic Filing to the US
Congress stating that what progress the IRS
making is in meeting the electronic filing goals
set by the Congress. In December, 2005, the
Congress has set a goal of that by the year
2007,80 of all individual income tax returns
filed by 2007 should be electronically.
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History and Development Of E-Filing
In India the first step towards electronic filing
was taken on 24th June, 2002, whereby Eligible
Employer (subject to minimum 50 employees and
from specified cities only) were allowed to
transcribe the data of their Employees returns on
computer readable media using an authorized Bulk
Return Preparation Software (BRPS). On 25th July
2003, an Electronic Furnishing of Returns of
Income Scheme, 2003 was published, which was
suppressed and revised updated scheme was
announced on 30th June, 2004.
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History and Development Of E-Filing
In Singapore almost 700,000 or 36 of taxpayers
filed their Annual Income Tax Return for the year
2001 electronically. To encourage taxpayers, the
IRAS is giving away Cash prizes in a lucky draw
for e-filers, as well as introducing a
Help-A-Friend To-E-File Scheme.
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History and Development Of E-Filing
Starting with 2004/05 return for employees with
250 or more Staff, the Inland Revenue, UK is
making electronic filing of the employers
compulsory with penalties for non-compliance,
KMPG piloted the UKs first fully electronic
system for Companies to approve and file their
corporation tax returns over the internet in late
March, 2004.
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History and Development Of E-Filing
With effect from June 2003, the South Africa
Revenue Services (SARS) decided to offer e-filing
as an in-house-service. Other countries like
Canada, France, Australia, Ireland, Chile etc
implemented electronic filing services very
successfully.
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History and Development Of E-Filing
In Pakistan the concept of electronic
transmission of Return/ Statements/ Documents was
introduced in the Income Tax Rules, 2002. The
Central Board of Revenue vide Notifications SRO
1184(I)/2005, and 1185(I)/2005 both dated
01.12.2005 introduced e-filing of Sales Tax and
Federal Excise Returns respectively. CBR along
with National Institutional Facilitation
Technologies (Pvt.) Ltd (NIFT) a joint venture
between consortiums of six banks started e-filing
initiative in the year 2005.
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History and Development Of E-Filing
According to available estimated figures of last
month,60-70 of the Corporate Registered persons
filed the Sales Tax Returns electronically and
hopefully the similar results will be achieved by
the Income Tax Department for the tax year 2006.
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Who are required to Electronically File Return?

• 1. Under the Electronic Filing of Federal Excise
  Return Rules, 2005 and the Electronic Filing of
  Sales Tax Return Rules, 2005, it is mandatory for
  the following persons to file their returns
  electronically-
• The registered persons falling in the
  jurisdiction of the Large Taxpayers Units,
  Karachi and Lahore and
• The private and public limited companies
  registered in other Collectorates of Sales Tax
  and Federal Excise.

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Who are required to Electronically File Return?

• 2. Under the provisions of Rule 73 of the Income
  Tax Rules, 2002 the taxpayer has option to
  furnish any return, certificate, application,
  statement or any other document.
• by post or courier service
• delivered by hand or
• electronically

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Benefits of E- Filing

• Efficient
• Convenient (24 hours a day, seven days a week,
  365 days a year)
• Time (calculations are done automatically) and
  Money (paper work cost) Saving
• Accuracy ( check is performed by preparation
  software)
• Quicker than filing on paper

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Benefits of E- Filing

• Anticipated increased efficiency in issuance of
  refunds
• Peace of mind (third party guarantee of
  privacy)
• It by passes geographical constraints
• Requires less physical space
• Reliable (guaranteed delivery with fully
  authenticated CBR confirmation for each return)
  and
• Tax practitioners will receive increased quality
  of service to clients and will have competitive
  advantage over practitioners not using E-Filing
  initiative.

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Obstacle in adopting E-Filing System

• Most of the person feels un-comfortable with
  newer technologies.
• Investment of time and money required to start
  on e-filing initiative.
• Desire to have a physical copy and proof of
  mailing.
• Low rate of computer literacy.

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Minimum Requirement to Enroll for NIFT Digital
Certificate

• Internet Explorer version 6 or above.
• Windows XP with service pack 2 (SP 2).
• Windows 2003 with Service Pack 4 (SP 4).
• Onsite MSI must be installed.

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How to obtain NIFT Digital Certificate?

• Visit NIFT website to download the Digital
  Certificate Request Form.
• Complete the Certificate Request Form and
  submit the same along with the following
  documents (duly attested) to NIFT in person or
  through mail or courier-
• a) CNIC.
• b) National Tax Number Certificate.
• c) Payment of Rupees 2,500/-
• d) Authority Letter from the Organization.
• e) If applying as a Chartered Accountant or
  Law Firm, Registration or Membership Certificate
  from the licensing authority or association.

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How to obtain NIFT Digital Certificate?

• NIFT designated Validation officer will issue
  (email) a Passcode with enrolment link after
  receiving the above documents, payment and
  completing the document verification process.
• On receipt of link and Passcode applicant should
  visit the enrolment link available on NIFT
  website for requesting a digital certificate.
• After enrolment is done with the Passcode, the
  certificate will be installed on your computer.

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Mode of dispatching the returns

• The following two modes are available
• Through E-Mail or
• Web-based application
• However, presently in Pakistan taxpayers can
  send the Return through E-Mail and hopefully this
  makeshift arrangement will be upgraded in the
  near future, which will enable CBR to facilitate
  more taxpayers and to handle large amount of data.

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How to send Return by E-Mail?

• Visit CBR website to download Ms Excel based
  updated version of tax Returns and to note the
  CBR specified email address for submission of the
  tax forms through email.
• Save the downloaded Return forms.
• Fill out all the applicable information in the
  downloaded tax forms.
• Send the filled tax forms through a digitally
  signed email with the NIFT Class 2 digital
  certificate.

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How to send Return by E-Mail?

• CBR will provide an acknowledgement through
  email to the end user upon receiving his/her
  signed email containing his/her returns (Income
  Tax/Sales Tax/ Federal Excise on Excel Format).
• This will complete the process of e-filing of
  returns to CBR, using NIFT class 2 digital
  certificates issued to the end user.

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Summary of Comparison of Filing of Sales Tax
Return Manually Vs Electronically

• A new column of Respective Collectorate has been
  inserted in the Electronic form.
• In the Electronic form the amounts of output and
  input tax is being computed automatically.
• Payment column and procedure has been modified
  to cater the need of form to be transmitted
  electronically. Nil filers are not required to
  file bank payment column.

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Concept of E-Intermediary or Authorized E-File
Providers etc.

• The concept of e-Intermediaries is as old as the
  history of e-filing. In Pakistan and India the
  eligible assesses can file their returns through
  the following e-intermediary-

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Concept of E-Intermediary or Authorized E-File
Providers etc.
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Concept of E-Intermediary or Authorized E-File
Providers etc.
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Answers to Most Frequent Problem Experienced in
Transmission of Return Electronically
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Answers to Most Frequent Problem Experienced in
Transmission of Return Electronically
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Answers to Most Frequent Problem Experienced in
Transmission of Return Electronically
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Answers to Most Frequent Problem Experienced in
Transmission of Return Electronically
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Answers to Most Frequent Problem Experienced in
Transmission of Return Electronically
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Answers to Most Frequent Problem Experienced in
Transmission of Return Electronically
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Answers to Most Frequent Problem Experienced in
Transmission of Return Electronically
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Answers to Most Frequent Problem Experienced in
Transmission of Return Electronically
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Answers to Most Frequent Problem Experienced in
Transmission of Return Electronically
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Answers to Most Frequent Problem Experienced in
Transmission of Return Electronically
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Answers to Most Frequent Problem Experienced in
Transmission of Return Electronically
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Answers to Most Frequent Problem Experienced in
Transmission of Return Electronically
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Do you know you may send the following
Forms/Statements besides Prescribed Returns?

• Quarterly statements of collection or deduction
  required under the Income Tax Ordinance, 2001
• Statements of Final Taxation required under
  sections 113A and 115(4) of the Income Tax
  Ordinance, 2001.
• Employers Certificate in lieu of Return of
  Total Income required under the Income Tax
  Ordinance, 2001.

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Do you know you may send the following
Forms/Statements besides Prescribed Returns?

• Attachment to Employers Certificate in lieu of
  Return of Total Income required under the Income
  Tax Ordinance, 2001.
• Annual statements of collection or deduction
  required under the Income Tax Ordinance, 2001.

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Way Forward (What should be done?)

• We all professionals must extend our whole
  hearted support to the Government and CBR for the
  successful implementation of Electronic Filling
  Scheme as a national cause. This can be done in
  the following two ways
• a) To point out any problem being faced by you
  or identify any shortcoming observed and make
  suggestions to resolve the said
  problems/shortcomings and
• b) Help a friend and motivate him to E-file
• Web-based services should be introduced

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Way Forward (What should be done?)

• Introduction of Electronic Payment System
• CBR should consider employing e-filing
  co-ordinators and trainers that would work with
  smaller firms of practitioners to further
  encourage e-filing
• Comprehensive Scheme and Hand Book should be
  developed for e-intermediary
• Authority Letter executed in favor of
  e-Intermediary and verification in the Income Tax
  Return be re-visited with a view to indemnify
  e-Intermediary
• The Procedure for application to obtain Digital
  Certificate should be allowed to perform
  electronically and

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Way Forward (what should be done?)

• Government must consider to use following four of
  its resources to incentivize the use of
  electronic transactions-
• a) Money Introducing direct financial incentives
  or payment flexibility
• b) Legitimate authority Gradually compelling
  taxpayers to use on-line
• c) Time Packaging up on line service, thereby
  saving user time through reduced transaction
  costs and
• d) Information and Expertise Providing enhanced
  information and expert advise through web-site
  contain and intelligent applications.

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Thank you all.
May Allah bless you.