Section 181D of the Income Tax Ordinance, 2001 requires businesses, professionals and other persons engaged in commercial activities to obtain and display licences, with fines for non-compliance.
The Federal Board of Revenue (FBR) will continue the business licence scheme in Tax Year 2027, requiring persons engaged in business, professions and vocations to obtain and display licences under the Income Tax Ordinance, 2001.
According to the Income Tax Ordinance updated up to June 30, 2026, for Tax Year 2027, Section 181D outlines the requirements for obtaining a business licence and penalties for failing to comply.
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Tax Year 2027 covers the period from July 1, 2026, to June 30, 2027.
Under Section 181D(1), every person engaged in any business, profession or vocation must obtain and display a business licence in the manner prescribed by the FBR.
Fines for Non-Compliance
The law empowers the Commissioner to impose a fine where a person fails to obtain the required business licence.
A taxpayer deriving income chargeable to tax under the ordinance may face a fine of Rs20,000. In all other cases, the prescribed fine is Rs5,000. These penalties may apply in addition to any other punishment under the ordinance or another applicable law.
Conditions for Licence Cancellation
Section 181D also authorises the Commissioner to cancel a business licence through a written order after giving the concerned person an opportunity to be heard.
Cancellation may follow if a person fails to notify changes in their particulars within 30 days or is convicted of an offence under any federal tax law.
The provisions establish licensing requirements and penalties for businesses and professionals during Tax Year 2027.
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