Section 193 of Income Tax Ordinance, 2001, updated up to June 30, 2021, now emphasizes that a taxpayer may face two years imprisonment on failure to keep record.
The amendments, incorporated through the Finance Act, 2021, underscore the significance of record-keeping in the tax administration system and seek to deter deliberate non-compliance.
The revised Section 193 reads: “Prosecution for failure to maintain records.—A person who fails to maintain records as required under this Ordinance shall commit an offence punishable on conviction with –
(a) where the failure was deliberate, a fine not exceeding fifty thousand rupees or imprisonment for a term not exceeding two years, or both; or
(b) in any other case, a fine not exceeding fifty thousand rupees.”
This amendment places a strong emphasis on the obligation of taxpayers to maintain records as stipulated by the Income Tax Ordinance, 2001. Failure to do so is now categorized as an offense, and the penalties vary based on the nature of the non-compliance.
For cases where the failure to maintain records is deemed deliberate, the penalties can include a fine of up to fifty thousand rupees, imprisonment for a term not exceeding two years, or a combination of both. This reflects the seriousness with which the FBR views deliberate attempts to circumvent record-keeping requirements.
In instances where the failure to maintain records is not deliberate, a fine not exceeding fifty thousand rupees is prescribed. This provides a more lenient approach for unintentional lapses in compliance while still emphasizing the importance of record-keeping in the tax administration process.
The amendment aligns with international best practices in tax administration, where maintaining accurate and up-to-date records is considered essential for ensuring the integrity of financial transactions and tax reporting. Adequate record-keeping also facilitates audits and assessments, contributing to a more transparent and accountable tax system.
Industry experts have welcomed this move, noting that it reinforces the fundamental principle of taxpayer responsibility. The penalties introduced under Section 193 are seen as a deterrent against negligence or intentional non-compliance with record-keeping requirements, promoting a culture of diligence among taxpayers.
The amendment to Section 193 of the Income Tax Ordinance, 2001, strengthening penalties for the failure to maintain records, signifies the FBR’s commitment to promoting accountability and transparency in the tax administration system. This change is anticipated to encourage taxpayers to adhere to record-keeping obligations, ultimately contributing to a more robust and effective tax enforcement environment in Pakistan.
