FBR requires taxpayers discontinuing a business to notify the Commissioner within 15 days and file a separate tax return for the discontinued period.

ISLAMABAD: The Federal Board of Revenue (FBR) has set a 15-day deadline for taxpayers to notify the Commissioner when discontinuing a business, along with additional tax return requirements under the Income Tax Ordinance, 2001.

The requirements are contained in Section 117, titled “Notice of discontinued business”, of the Income Tax Ordinance, 2001, updated up to June 30, 2026, for Tax Year 2027. The tax year runs from July 1, 2026, to June 30, 2027.

15-day notification requirement

Under Section 117, any person who discontinues a business must provide written notice to the Commissioner within 15 days of the discontinuance.

The taxpayer must also submit an income tax return covering the period from the first day of the tax year in which the business was discontinued up to the date of discontinuance.

The law treats this period as a separate tax year for the purposes of the Income Tax Ordinance, 2001.

Commissioner can require a tax return

The provision also empowers the Commissioner to take action where a taxpayer fails to provide the required notice.

If the Commissioner has reasonable grounds to believe that a business has already been discontinued or is likely to be discontinued, a notice may be served on the relevant person.

The taxpayer must then submit an income tax return for the period specified in the Commissioner’s notice within the prescribed timeframe.

Return treated as regular income tax return

A return submitted under Section 117 is treated as a return of income for all purposes of the Income Tax Ordinance, 2001.

This includes the application of Section 120, which deals with the assessment of income tax returns.

The provision is designed to ensure that income earned up to the date a business is discontinued is properly reported and remains within the tax framework.

Businesses and taxpayers ending their operations must therefore comply with the 15-day notification requirement and complete the applicable tax return for the separate tax period created by the discontinuance.